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New challenges, new directions GROUPE JEUNE AFRIQUE INTERNATIONAL EDITION

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People to watch, key data and analysis to guide you through the political and economic year ahead

CONTENTS

FREE with this issue: a “CHALLENGE” sponsored supplement on DRC. Not to be sold separately

54 country reports Double issue

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THE AFRICA REPORT # 76 - DECEMBER 2015-JANUARY 2016

Africa in

New challenges, new directions GROUPE JEUNE AFRIQUE INTERNATIONAL EDITION

Algeria 550 DA • Angola 600 Kwanza • Austria 4.90 € • Belgium 4.90 € • Canada 6.95 CAN$ • Denmark 60 DK • Ethiopia 75 Birr • France 4.90 € Germany 4.90 € • Ghana 7 GH¢ • Italy 4.90 € • Kenya 410 shillings • Liberia $LD 300 • Morocco 50 DH • Netherlands 4.90 € • Nigeria 600 naira Norway 60 NK • Portugal 4.90 € • Sierra Leone LE 12,000 • South Africa 35 rand (tax incl.) • Spain 4.90 € • Switzerland 9.90 FS • Tanzania 9,000 shillings Tunisia 8 DT • Uganda 9,000 shillings • UK £ 4.50 • United States US$ 6.95 • Zambia 30 ZMW • Zimbabwe US$ 4 • CFA Countries 3,500 FCFA

Africa in 2016 102 1 21 91 ART & LIFE A GUIDE TO 2016

FRONTLINE: WHAT TO WATCH IN 2016

From election fever and drone airports to drug-resistant malaria and plunging commodities prices, Africa is facing new challenges and opportunities.

Our experts whet the appetite for upcoming treats in literature, cinema, music, art, theatre and travel, plus reviews of 2015’s best albums, films and books and an exclusive interview with A. Igoni Barrett.

COUNTRY FOCUS

4 EDITORIAL Change the system, not the climate

53 ETHIOPIA When giants dance Investors from East and West are helping drive the economy

6 LETTERS 8 YEAR IN IMAGES 14 OPINION Stephen Chan 18 END OF YEAR QUIZ

BUSINESS

The Africa Report’s comprehensive political and economic analysis alongside key data and statistics to guide you through the year ahead, country by country.

ART & LIFE 92 BOOKS A. Igoni Barrett The Nigerian author of Blackass on the importance of helping African writers find their voices 96 LOOKING AHEAD Our guide to 2016 100 REVIEWS Our pick of the best of 2015

FRONTLINE 21 THE YEAR AHEAD What to watch in 2016 The key issues facing Africa, including our roundup of the bumper year ahead in elections

COUNTRY PROFILES 66 ELECTRICITY Who’s got watts?

POLITICS 32 DEMOCRATIC VOICES The people’s manifesto We speak to a host of people from across the continent to find their policy priorities for 2016 36 SOUTH AFRICA The heartland is burning 42 INTERVIEW South Africa’s former president Thabo Mbeki 50 OPINION Olusegun Obasanjo THE AFRICA REPORT

54 COUNTRY PROFILES

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72 CONSUMERS More bills than thrills 76 INTERVIEW Ade Ayeyemi, Ecobank 78 TAR DEBATES Democracy versus development DOSSIER – MINING 82 End of the supercycle The commodities crash takes its toll

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Your indispensible guide to the crucial economic and political events, and the people to watch, across Africa’s 54 countries throughout 2016 102 INTRODUCTION 107 SOUTHERN AFRICA 127 EAST AFRICA 147 CENTRAL AFRICA 161 WEST AFRICA 183 NORTH AFRICA

This issue carries an insert between pages 98 and 99 for selected countries

EDITORIAL

THE AFRICA REPORT A Groupe Jeune Afrique publication

BY PATRICK SMITH

Change the system, not the climate

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n a metro train hurtling across Paris during the climate summit in December, a printed note stuck to a door bore the words “Changeons le système, pas le climat”. As a call to action for the more than 150 leaders attending the negotiations, it would be hard to beat. And as so many people find themselves in states of siege after terrorist attacks in Beirut, Paris, Yola, Bamako and Kano, there is a growing belief that incremental tweaks cannot address such blights as grinding poverty, deepening inequality, religious and communal violence and catastrophic climate change. Sadly, there is little chance of the leaders listening to such calls. Take the core issues at the climate talks: our expectations have been lowered skilfully with each new round of consultations. Firstly, there was the insistence that a treaty putting limits on carbon emissions would be legally binding. That was abandoned as it became clear that few of the richest or most populous countries would accept that. Secondly, there was to be an agreed price put on carbon emissions. The implication of that was that rich countries would have to end the $600bn in annual subsidies to coal and oil producers and get more serious about alternatives. Thirdly, there was the call for a $100bn fund to promote green energy and additional funds to help poor countries adapt to climate change. The silence on that has been close to deafening. Yet, so far, only the most hardened eco-warriors are dismissing the Paris talks. This assembly of world leaders, each trying to carve a niche in history, should yield some forward movement but a bigger opportunity is

being missed. It recalls another grand conference in Paris, in 1919, when government and activist delegations worked for six months to restructure the world order in the wake of the First World War. For all the idealism that suffused that Paris conference – international edicts outlawing discrimination, the restoration of people’s land rights and the end of colonial If the climate domination – the result was a messy comtalks prove promise. Ignoring the anything, revolutionary imperatit is the ives of liberté, égalité et fraternité, delegates need for stuck to short-term a wholesale nationalist interests. And so they laid the upgrading foundation for the ecoof ambition nomic convulsions of the 1920s, the rise of fascism in the 1930s and another still more devastating global war in the 1940s. Governments again tried to remake the world in 1945, but the old global ruling class remained at the wheel. If the climate negotiations in Paris have proved anything, it is the need for a wholesale upgrading of ambition. Let the next round of global tractations tackle the economic and political underpinnings of the climate, poverty and security crises. They could start by changing the system – the agencies and institutions set up in 1945 – and making them representative of today’s world. It is a world in which Africa, China and India will host over half of the global population by 2050. Without radical change in these economic and political structures, we all risk a catastrophic rerun of Europe’s tragedies of the past century. ●

edit editorial@theafricareport.com

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M A R K E T I NG & D E VE L O P M E NT ALISON KINGSLEY-HALL E D I T O R I N CHI E F PATRICK SMITH M A NA G I NG E D I T O R NICHOLAS NORBROOK editorial@theafricareport.com A S S I S TA NT E D I T O R CHARLIE HAMILTON A S S O CI AT E E D I T O R MARSHALL VAN VALEN E D I T O R I A L A S S I S TA NT OHENEBA AMA NTI OSEI R E G I O NA L E D I T O R S PARSELELO KANTAI (EAST AFRICA) CRYSTAL ORDERSON (SOUTHERN AFRICA) TOLU OGUNLESI (NIGERIA) BILLIE ADWOA MCTERNAN (GHANA) S UB - E D I T O R S ALISON CULLIFORD ERIN CONROY P R O O F R E A D I NG KATHLEEN GRAY A RT DI R E CT O R MARC TRENSON DESIGN VALÉRIE OLIVIER (LEAD DESIGNER) SAMA DANAN CAMILLE CHAUVIN (INFOGRAPHICS) CHRISTOPHE CHAUVIN (INFOGRAPHICS) P RO DUCT I O N PHILIPPE MARTIN CHRISTIAN KASONGO R E S E A R CH SYLVIE FOURNIER P HO T O G R A P HY PIERANGÉLIQUE SCHOULER ON LI NE PRINCE OFORI-ATTA SALES SANDRA DROUET Tel: (33) 1 44 30 18 07 – Fax: (33) 1 45 20 09 67 sales@theafricareport.com CONTACT FOR SUBSCRIPTION: Webscribe Ltd Unit 8 The Old Silk Mill Brook Street, Tring Hertfordshire HP23 5EF United Kingdom Tel: + 44 (0) 1442 820580 Fax: + 44 (0) 1442 827912 Email: subs@webscribe.co.uk 1 year subscription (10 issues): All destinations: €39 - $60 - £35 TO ORDER ONLINE: www.theafricareportstore.com D I F CO M INTERNATIONAL ADVERTISING AND COMMUNICATION AGENCY 57-BIS, RUE D’AUTEUIL 75016 PARIS - FRANCE Tel: (33) 1 44 30 19-60 – Fax: (33) 1 44 30 18 34 advertising@theafricareport.com A D VE RT I S I NG D I R E CT O R NATHALIE GUILLERY WITH JEANNY CHABON R E G I O NA L M A NA G E R S ÉLODIE BOUSSONNIERE IBIJOKE FABORODE PASCALE LALLEMAND PRINTER: SIEP 77 - FRANCE N° DE COMMISSION PARITAIRE : 0720 I 86885 Dépôt légal à parution / ISSN 1950-4810 THE AFRICA REPORT is published by GROUPE JEUNE AFRIQUE

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MAKING THE MOST OF CHINA TIES

TOUGH TALK Democracy vs developmentt

> Buhari picks his A-team > SA’s first woman president? > The mobile data revolution

hina’s economic slowdown and its growing presence in Africa [‘When the dragon sneezes, does Africa catch a cold?’, TAR75 Nov 2015] serves a key role in inspiring the continent to reflect on its economic future. But Africa should do much more in order to experience convergence and to profit from the Dragon sneezes, relationship with China. African countries should Africa catches cold leverage on this relationship to diversity their economies, industrialise, climb up the value-added chain and promote regional markets. This relationship should be a serious consideration for African leaders tasked with the responsibility of shaping the continent’s future. African countries need to know upfront what they want from the Chinese. With inclusive institutions and incentives to further local interests, Africa could benefit from the relationship. For now it’s business as usual for win-win development. Martin Namasaka COMESA Business Council, Project Communications Officer, via email w w w.t he af rica repor t .c om

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‘LOW-COST’ PRIVATE SCHOOLS ARE NOT FOR ALL I was disappointed to see your article on low-cost learning and SPARK Schools [‘South Africa: Low-cost learning’, TAR74 Oct 2015]. Education has the potential to be the most powerful equalising force in any country but is undermined if access to education is stratified based on parents’ ability to pay. International human rights law is very clear about the requirement for primary education to be free and for free education to be progressively realised at other levels. Charging over $1,000 for a primary school violates this – and it is not “low

and Senegal has been a key target country. During this time we have seen horticultural exports to the European Union grow impressively from 9,605tn per year in 2001 to 71,371tn in 2014. The challenge is to maintain this growth in a competitive market while strengthening production and processing for local and regional markets. In this context there are many opportunities to capitalise on the progress made in export horticulture and extend this to benefit other sectors. Morag Webb, Policy Adviser, Europe-Africa-Caribbean-Pacific Liaison Committee (COLEACP) via email

HELP FOR THE AFRICAN START-UP SCENE

I think Africa should set up more venture capital firms that would provide capital to young tech entrepreneurs who have brilliant ideas David Archer, but lack the financial and logistical Head of Programme Development, resources to turn those ideas ActionAid via email into reality [‘The Question’, TAR74 Oct 2015]. African governments should also invest more in education, especially relating to technology. A DEMANDING MARKET FOR FRESH FOOD EXPORTS Our universities can and should be hubs of learning and innovating It was encouraging to read the technology. Africa should stop seeing agribusiness dossier on the technology as something Western. horticultural industry in Senegal It should take the technical segment [‘Senegal gets growing’, TAR74 Oct of its diaspora more seriously and seek 2015]. COLEACP has been providing for creative ways to involve them support to horticultural producers in the development of our technology. Maikel Ibia, via Facebook and exporters in Africa since 2001, cost” for the majority of South Africans. Let us not celebrate something that entrenches and exacerbates inequality.

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21-22 March 2016, Abidjan

4TH EDITION

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2016 will mark the fourth edition of the AFRICA CEO FORUM. Since its inception in 2012, the AFRICA CEO FORUM has established itself as the foremost event devoted to promoting the African private sector. Each year, the event brings together more than 800 worldclass CEOs, bankers and investors, cementing its reputation as a mustattend event for top African business leaders. A unique platform for thought-provoking discussions, the AFRICA CEO FORUM is an excellent opportunity for you to develop your business, shape your strategy and enhance your companyâ&#x20AC;&#x2122;s competitiveness. theafricaceoforum.com Twitter: @africaceoforum - #ACF2016

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YEAR IN IMAGES Africa’s peoples shone in their determination to get a better future for their children, pushing back against third-term agendas and staying resilient in the face of terror

FEBRUARY MALEMA DRIVES THE AGENDA Lawmakers from the Economic Freedom Fighters disrupted the State of the Nation speech, demanding President Jacob Zuma answer questions about spending on his Nkandla homestead.

JANUARY TEAR-GASSING CHILDREN Police fired teargas at demonstrators - including pupils of the Langata Road Primary School in Nairobi, Kenya protesting against a land grab of the children’s playground by property developers. THE AFRICA REPORT

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YEAR IN IMAGES

CARL DE SOUZA/AFP

FEBRUARY CÔTE D’IVOIRE WINS CUP Defender Kolo Touré (centre) celebrates with Côte d’Ivoire teammates after winning the 2015 Africa Cup of Nations in a nail-biting 9:8 penalty shootout against Ghana in the Bata Stadium. The tournament was held in Equatorial Guinea after Morocco refused to host it due to fears over Ebola.

ERIC LAFFORGUE/GAMMA-RAPHO VIA GETTY IMAGES

RODGER BOSCH/AP/SIPA

FEBRUARY MORE GRAMMY GLORY Beninese singer Angélique Kidjo scooped her second Grammy music award at a star-studded gala in Los Angeles. She dedicated her gong for for her 2014 album Eve to “the women of Africa – to their beauty and resilience”.

THE AFRICA REPORT

FRAZER HARRISON/ GETTY IMAGES/AFP

DAI KUROKAWA/EPA/MAXPPP

MARCH EAST AFRICA’S LARGEST PORT Tanzania’s then President Jakaya Kikwete announced plans to build an $11bn port in his hometown of Bagamoyo. Construction work on the project, which will be East Africa’s largest port and is backed by Chinese finance, started in October.

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YEAR IN IMAGES

SUNDAY ALAMBA/AP/SIPA

JUNE LAST MAN STANDING In the wake of a poaching tragedy, Kenya’s Maasai Cricket Warriors launched a rhino-protection campaign with Sudan – the sole male of his species left on earth. THE AFRICA REPORT

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AUGUST NEW SUEZ CANAL Egypt’s President Abdel Fattah al-Sisi opened an expansion of the famous waterway, completed in just 12 months. The $8.2bn project will almost double the volume of traffic the canal can handle.

ZHANG FAN/XINHUA-REA

AP/SIPA

APRIL FIRST DEMOCRATIC TRANSITION FOR NIGERIA Former military general Muhammadu Buhari returned to the presidency at Aso Rock after becoming the country’s first opposition leader to unseat a sitting president. He beat Goodluck Jonathan with a campaign focused on combating corruption.

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YEAR IN IMAGES

GORAN TOMASEVIC/REUTERS

MAY COUP CAMPAIGN CRUSHED Amid vocal street protests in Burundi against President Pierre Nkurunziza’s plan to run for a third term, General Godefroid Niyombare led a military coup on 13 May. In only two days Nkurunziza was back, declaring that peace had returned, while military patrols suppressed ongoing anti-third term demonstrations.

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JEROME DELAY/AP/SIPA

NICOLAS FAUQUÈ/CORBIS

MAY, JUNE, NOVEMBER SURVIVING TERROR From the slaughter on the beaches of Sousse in Tunisia, the regular attacks by Boko Haram in Nigeria and the release of kidnapped girls, to the shootings in Paris and the attack on the hotel in Mali’s capital that bookended the year, it is clear that the war in Syria and northern Iraq has trained a new generation of terrorists. The concern now is that militants fresh from the Syrian conflict are in Libya and seeking to connect to groups in the Sahel. Africa’s struggle to contain the push from Islamic State will be one of the defining battles of the year ahead.

YEAR IN IMAGES

SOLAN KOLLI/EPA/MAXPPP

SEPTEMBER RAIL RECORD-BREAKER Ethiopia launched the first light railway system in sub-Saharan Africa in Addis Ababa. The network will carry some 60,000 passengers per hour when fully operational.

DANIEL HAYDUK/AFP

FRANCOIS PAULETTO/DEMOTIX/CORBIS

OCTOBER CHANGE AT THE TOP Former works minister John Magufuli became Tanzania’s president after a closely fought contest against opposition candidate and ex-prime minister Edward Lowassa, who defected from the ruling party.

DECEMBER NOT THE REAL DEAL The attempt at the Paris COP21 climate talks to hammer out an agreement to avert the worst of climate change fell short.

GIANLUIGI GUERCIA/AFP

NOVEMBER PRAYING FOR PEACE Pope Francis began his first tour of Africa with visits to Kenya, Uganda and the Central African Republic. Amid tight security, the pontiff called for reconciliation between Christian and Muslim communities and an end to religious violence.

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OPINION S Stephen Chan Proffessor of international relations, School of Oriental and African Studies, UK

The fluid world of the 21st century

owards the end of his life, the Palestinian intellectual Edward Said declared that homeland was no longer important to him. He had spent his life as an exile, and he saw the violence and damage that a sense of place could create – especially when that space was contested by peoples who sought its sole ownership. Of course, Said was privileged. Instead of one place he had great mobility, travelling the world as an acclaimed thinker and activist. The refugee stranded in an arid encampment for displaced peoples might be forgiven for dreaming of a homeland as it once was. Or dreaming of a bold escape to Germany, through the razor-wired borderlands of Hungary; across the Mediterranean in leaking rubber dinghies; arriving on an island off Greece or Italy; or, finally, reaching Norway or Sweden as the northern European winter sweeps in and all around speak a language and have habits that are alien. Then that refugee will also, at least at times, dream of a home that no longer exists. The more he or she dreams, the more ‘home’ becomes mythological – so that, on the eve of 2016 we are all caught at a crossroads where the globe is a reality but contested by great political and economic powers that are beyond dreaming citizens; and where ‘home’, even for the most settled citizen, is bombarded in all directions by global influences and even global commands. If the IMF sneezes, half of Africa catches cold. Both the world at large and home become mythologies, where imagination has to salvage something that belongs to an individual. Even in Edward Said’s time, before the full impact of the global internet with its newsfeeds and social networks, the planet was globalised. Banks laundered money around the world, great military alliances bestrode continents, and huge supranational institutions ruled our lives as much as governments. Of course, the activities of these institutions have been heightened by new communications, and these same communication networks let us see that our lives are no longer contained in a single home – except insofar as the world can be electronically brought into our living rooms. Now, when affronted by the savageries of the world, we press a button to sign a protest and consider ourselves activists.

Around the world, citizens push buttons. Smartphone penetration ranks alongside GDP, per capita income, life expectancy and literacy as a development index. A peasant farmer in Kenya will send money with his app, and a pirate off the Somali coast will navigate with his own app – knowing that the ransoms he might gain can now be electronically paid and laundered a hundred times within two hours of first receipt. The world is beset by great corporations who establish headquarters in one country for tax purposes and conduct their volume trade in others. And franchising sweeps the world. A Big Mac will be found in Ramallah, Palestine, as readily as in Johannesburg. A global retail therapy has become the opium of the masses and it can be the same retail therapy, dependent only on whether Amazon or Alibaba has yet reached every once-faraway country.

The real advent of ‘homelessness’ is in crafting giant trading blocs Buttherealadventof‘homelessness’ – that sense of ‘it doesn’t matter where we live anymore’ – lies in the crafting of new gigantic trading and financial blocs. Both America and China are into this. The US-led Trans-Pacific Partnership Agreement is a case in point; and the Chinese-led Asian Infrastructure Investment Bank was an instant challenge. Particularly as 2016 leads us towards the G20, to be hosted in China, all eyes will turn to the new financial institutions being crafted in one region after another by the Chinese. And these new funds and banks will finance great transport and communication corridors. They will transform Pakistan, the Transcaucasian Silk Road route, Brazil, and huge parts of Africa. The new Chinese model is not centred only on highways and railways, but electronic networks the length of THE AFRICA REPORT

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OPINION

the roads and rail. Once they command communications in as many parts of the world as possible, then there will be command of globalisation beyond what even economic command can deliver. So, what role for Africa in this new, amazing and of course disturbing world? South Africa is a member of the G20 – although a most uninformed and lacklustre member. There aren’t many experts on the G20 in either the South African Ministry of Foreign Affairs or the President’s Office. The African Union is granted attendance rights, but the AU is consumed by insurrections and political meltdowns across the continent. And those insurrections – someone, somewhere, has ordered the same fleets of Toyota and Nissan

The trick about handling globlisation is to balance one player against another flat-traypickups,mountedthemwiththesameBrowning machine guns, reinforced the trays in the same way to absorb the kickback of those guns (probably bolting down to the chassis), and given the same operational training to fighters as far apart as Mali, northern Nigeria, Central African Republic, Somalia – and of course Syria, Iraq and Afghanistan. Africa is part of a globalisation that is not often pretty. Slowly, there is an African participation in the new globe: South African capital finances cattle ranching in Sudan for export markets in China. But, more often than not, African countries are still on the receiving end of bad deals with multinational corporations.Zambiais sufferingfrom falling copper prices, but the meltdown in one big mining company, Glencore, was enough to turn a crisis into a catastrophe. The trick about handling globalisation, of course, is the ability to balance one player against another – just as, in the old Cold War years, one superpower could (sometimes) be balanced against another. Can there be a command of internationalism when the project of nationalism is not yet itself secure? This asks the wrong question. No one’s project of nationalism is yet secure. Catalonia and Spain? ScotlandandtheUnitedKingdom–never mindtheoldproblemofNorthernIreland? Who owns which part of the Ukraine? Will China and Taiwan ever arrive at a settlement? The twin projects of nationalism and internationalism need to be taken forward simultaneously. As for the shivering refugee from Eritrea, Somalia, South Sudan or Syria who makes it through to Germany, and who gets papers, what will he or she do? Each one will look for a job. Each one will seek schools for the children. Each one will send remittances home. Each one will learn more than one language, more than one set of national habits, participate in more than one culture, seek to gain respect in a diasporic community while seeking success and acceptance in the host community. In a few short years each one will be a hybrid – Somali/German/European/ worldly. And their stories will be captured in videos and social media, just as the flight of their successors will be. And all will join a world story that puts into a mythological past this idea of homeland, this idea of safety in one place that is now everywhere destroyed. ●

Chinese companies are discovering the long-term benefit in Africa. In the past decade, investments from China into Africa have skyrocketed, placing the country squarely among Africa’s most valued partners. Not only has the Asian giant provided a stable market for Africa’s wealth of raw materials, but it is also playing a pivotal role in the continent’s development by building and upgrading vital infrastructure and providing the investment capital that helps to free up government revenues for the vital priorities of education and healthcare. To start with, since 2010, Africa has run a trade surplus, not a deficit, with China, which amounted to more than $9 billion last year. Total trade flows reached a record $222 billion, more than double the amount recorded in 2010, dwarfing the $10 billion seen in 2000. According to Chinese Premier Li Keqiang during a visit to the African Union headquarters last year, the value of trade volume between China and Africa will swell to $400 billion by 2020. More importantly, he predicted that China’s FDI stock on the continent would rocket to $100 billion over the next five years, from its current $26 billion. This has also increased at an exponential rate over the past decade, as Chinese state-owned and private companies take on investment imperatives on the continent, which developed countries are shying away from due to their risk aversion. There are 2,500 Chinese companies invested in Africa at present, using debt and equity raised mainly from Chinese commercial and policy banks. These companies are pursuing the opportunities open to them on the continent despite the slowdown in their own economy and are partly responsible for Africa’s rapid pace of growth over the past few years, which has outstripped all other regions of the world, except for Asia itself. The China-Africa Development Fund (CAD Fund) has invested in more than 80 projects in 35 African countries, drawing billions of dollars of other investments from Chinese investors. Chinese information and communications technology brands, such as Huawei and ZTE, are providing telecoms equipment to African network operators and smart phones to consumers; China General Nuclear Power Holding Corporation is building what will become the world’s second biggest uranium mine in Namibia; and the China Exim Bank has provided most of the finance for a 609 km railway line, which will link Kenya, Uganda, Rwanda, Burundi and South Sudan. Sinohydro has been involved in building more than 70 hydropower dams on the continent, while the China Communications Construction Company is behind numerous projects, including railways, airports and ports.

Another example of the increasing link between the regions is the recent financing covered by Sinosure (China Export and Credit Insurance Corporation) into Maamba Collieries Limited (MCL) in Zambia. The financing, provided by Barclays and Chinese commercial banks in partnership with development finance institutions, will enable MCL to complete the construction of two 150MW coal-fired power plants on the site of an existing coal mine, together with a new transmission line to connect them to the national grid. The project will contribute approximately 17% to Zambia’s installed electricity generation capacity and in the process unlock economic growth potential in the region where current electrification rates are just 20%. Chinese state-owned and private companies are also pumping money into factories to support Africa’s product chains and to upskill the human capital necessary to drive these industries through higher education, training and access to technology. Chinese companies have created thousands of African jobs in the process, and the trend is set to continue as the Asian giant moves part of its manufacturing base overseas to take advantage of lower labour costs. According to the World Bank, China’s cumulative investment stock in the manufacturing sector on the continent grew by 10% to $2.4 billion in 2011 and accounted for 15% of its FDI in 2013. Examples include the construction of a $100 million cement factory in Mozambique’s Maputo province and a shoe factory in Ethiopia, established by Chinese manufacturer Huajian. It is clear that Chinese corporates have begun to recognise that to reap the long-term benefits from Africa, they need to be long-term, sustainable investors – they must build value chains through strong relationships with local buyers, local suppliers, and most importantly, local governments. They know that doing business in the developing world today requires stewardship – namely, the communities in which they base themselves must be developed, and they cannot operate on an insular or silo basis. Investment in Africa is not just for a quick buck. Rather, it is about moving towards a long-term sustainable goal where you will get your long-term returns but you must also commit to the long-term benefit of the continent – an imperative recognised by Chinese and other Asian companies. In doing so, one of the world’s most important trade corridors is strengthened and socio-economic value is created on both continents. n

When ambitions change lives, we all prosper.

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QUIZ 15 Questions from 2015

CHRISTIAN LIEWIG/FEP/PANORAMIC

Think you’ve had your finger on the pulse of news across the African continent? Well, here is your chance to find out with The Africa Report news quiz. The first five people to answer all the questions correctly will receive a year’s free digital subscription to www.theafricareport.com. Please send your answers to quiz@theafricareport.com by 8 January 2016.

▲ Which country was thrown out of the 2015 Africa Cup of Nations tournament after it refused to host the event due to fears over Ebola? a) Morocco b) Equatorial Guinea c) Ghana Where were Ugandan rugby stars Benon Kizza and teammate Philip Pariyo, who vanished during the Commonwealth Games in Glasgow 2014, discovered playing for a small local team? a) England b) Scotland c) Wales

▲ In which country was the award-winning film about child soldiers Beasts of No Nation filmed? a) Ghana b) Angola c) DRC

The government of Burkina Faso was rocked by an attempted coup in September, but for how long did the turmoil last? a) Seven hours b) Seven days c) Seven weeks

Who replaced Donald Kaberuka to take over as the new head of the African Development Bank in September? a) Akinwumi A. Adesina b) Sufian Ahmed c) Cristina Duarte

Which president was ridiculed after he accidentally read the wrong speech at the opening of parliament? a) Abdelaziz Bouteflika b) Robert Mugabe c) Yoweri Museveni

minister taking charge of dayto-day affairs? a) Defence b) Agriculture c) Petroleum

Which international broadcaster was banned in Rwanda after airing a report on the 1994 genocide? a) BBC b) CNN c) Al Jazeera

How much did the Glencore share price fall over the past four years as world commodity prices crashed? a) 28% b) 48% c) 88%

Which Nigerian federal ministry will be directly supervised by President Buhari with a junior THE AFRICA REPORT

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LNP/REX SHUTTERSTOCK/SIPA

SHAWN GREENE

QUIZ

a) 1,000 b) 10,000 c) 100,000

RAND CORPORATION

â&#x2013;˛ Which country celebrated being declared free of the Ebola virus by the World Health Organisation on 7 November? a) Nigeria b) Sierra Leone c) Liberia

Mediators from which North African country won the Nobel Peace Prize in recognition of their efforts

to continue reform after the Arab Spring? a) Tunisia b) Morocco c) Egypt

Which musician won the hotly-contested 2015 Ghana Music Awards Artist of the Year gong at the event in April? a) Sarkodie b) Shatta Wale c) Stonebwoy

Which household-name social media firm set up its first African office in 2015? a) Instagram b) Twitter c) Facebook

As of 15 November 2015, how many presidents have changed the constitution or are trying to change the constitution of their country in order to remain in office? a) 3 b) 4 c) 5

South African students forced a government U-turn on tuition fees by holding a series of street protests, but how many people took part in the demonstrations?

Students dents den

Micro Insur Mi Insurance nsura sur nce

Merchants Remittances ittanc itt ances Mobile M obile le Money oney

Chinaa Ch

Credit Cards Crowd wd funding g Du Duess Disbursements

Direct ectt Debit Debits bits

Salaries Sa

Fee Collecti Collec Collections Co ections

Cash

Farmers

Alumni Alu umni u mni

e-comm e-commerce ommerc ommerce omm

TThe he ffuture utu u ure of of PAYM PAY P AY YMEN Y M ME EN E N NTS PAYMENTS ECOW ECOWAS OWAS

Prepaid Cards

e-billing e-bill illing ing Pensions Pens Pensions Wallets Wall Wa llets ets

Utilities Uti iilities lities lit

Reconciliation Reconc Re oncili onc

Insurance Insur uranc nce Loans Lo

Micro pa Mi paymen payments yments ymen

Banks Ban ks Informal Inform In rmal al Sector S tor Security Secu ecurit curitty

Consumers Cons nsumer umer umers

Associations

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FRONTLINE

What to watch in

2016

The year ahead will be one of political suspense as several leaders with decades in power seek to hold on and the electoral calendar in the Democratic Republic of Congo looks impossible to respect. The Africa Report provides you with a guide to 2016 in terms of its technological innovations, threats to healthcare systems, changes in weather patterns and problems with debt and low commodity prices. By Charlie Hamilton, Billie Adwoa McTernan, Nicholas Norbrook, Patrick Smith and Marshall Van Valen THE AFRICA REPORT

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FRONTLINE | WHAT TO WATCH IN 2016

Plentiful polls across Africa in 2016, as old guard hold on to power at all costs

he year 2015 hosted a bumper crop of high-stakes elections, and 2016 brings more of the same. A major trend involves presidents seeking to hold on to power for as long as possible by almost any means necessary. The Democratic Republic of Congo, the Republic of Congo, Djibouti, Chad and Uganda all have presidents with no immediate plans for retirement. Whereas the last three on the list have no constitutional term limits, the leaders of the two Congos will have to pull out all stops to stay around longer. The year 2015 brought violence as Burundi’s President Pierre Nkurunziza crushed all opposition to his controversial third term and a brief coupinBurkinaFasocontinueditspostBlaise Compaoré transition; 2016 too could bring political turmoil. However, in many countries holding votes in 2016, opposition parties have struggled to gain a foothold. In Uganda, the police placed the opposition leader under house arrest in October 2015 to prevent him from holding political rallies. In Djibouti, the government has refused to implement the reforms that it agreed to with the opposition in order for it to call off its political boycotts. Meanwhile, in Ghana, the National Patriotic Party has been unsuccessful in getting the government to implement reforms to avoid the contestation and long legal battles that marked the late 2012 vote. South Africa will hold local rather than national elections in the year ahead, and the opposition has concerns about electoral fairness. In October, President Jacob Zuma appointed his adviser for special projects Vuma Mashinini to lead the electoral commission and replace Pansy Tlakula, who stepped down due to a corruption scandal. In late November, theconstitutionalcourtthrewoutsome local election results from 2013, showing Mashinini will have his work cut out for him to convince some parties that his closeness to Zuma will not influence electoral management. ●

GIANLUIGI GUERCIA/AFP

Zambia ▲

President Edgar Lungu faces a tough election campaign due to copper mines shutting down and the resulting reduction in government revenue. His alliance with his former opponents in the Movement for Multiparty Democracy could help him to beat challenger Hakainde Hichilema, who took 46.7% of the vote in the presidential by-election of 2015.

Democratic Republic of Congo 3

Niger

The main opposition parties rejected the electoral calendar, but finally chose to federate against the ruling party. Nevertheless, the powers of incumbency a re l i ke l y t o p ro p e l P re s i d e nt Mahamadou Issoufou to victory in elections planned for February.

In late November, President Joseph Kabila maintained his policy of providing as little information as possible about his intentions for elections due to take place before the end of 2016 when he announced the launch of a national dialogue. The government does not have the funds or the logistical capacity to organise a series of local and other elections before the presidential vote in November 2016, and Kabila’s opponents and former allies argue that he is looking to use the crisis to stay in power for as long as possible. Kabila says that he will accept oppositionist Étienne Tshisekedi’s demand for international mediation in the political dialogue in the hopes of co-opting some members of the opposition.

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WHAT TO WATCH IN 2016 | FRONTLINE

ELECTIONS

2 5

1 5

Ghana 6

President John Mahama’s government has much riding on its ability to address the country’s electricity generation deficit before the late 2016 presidential election. The opposition National Patriotic Party (NPP) has been calling for a new electoral register, something that the electoral commission has so far opposed. The NPP’s Nana Akufo-Addo is hoping to present himself as a change candidate like Nigeria’s Muhammadu Buhari.

Cyril Ramaphosa and African Union Commission chair Nkosazana Dlamini-Zuma are the current frontrunners.

MIKE HUTCHINGS/REUTERS MICHAEL KAPPELER/EPA/CORBIS

Benin

With the country’s highly fragmented political spectrum, the competition is wide open to replace President Thomas Boni Yayi, whose government has struggled to fight corruption and meet its campaign promises. •

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South Africa ▲

The May 2016 local elections will be a litmus test for President Jacob Zuma’s African National Congress (ANC) government. The ANC has been losing members recently and the labour unions that make part of its tripartite alliance have been in turmoil. Local issues like service delivery are set to be the main topic of debate. The ANC will be hoping its electoral ground troops can be galvanised, while the Democratic Alliance under Mmusi Maimane and the Economic Freedom Fighters led by Julius Malema see the local vote as a key chance to build up support and win provinces away from the ANC ahead of polls in 2019, when the governing party is due to select a new presidential candidate. Deputy president

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Republic of Congo

So far, President Denis Sassou Nguesso has steamrolled through all opposition to his plans to change the constitution’s age limits and allow him a new term in office. Civil society groups have not been able to organise a repeat of what took place in Burkina Faso in 2014.

Chad

With low oil prices and the government scrambling to cut budgets and raise revenue, Chad will head to the polls in 2016. President Idriss Déby faces few strong challengers to continue what will be his 26 years in power next year.

THE AFRICA REPORT

4 7

Uganda

The defection of former prime minister Amama Mbabazi offers the opposition’s best chance of shaking President Yoweri Museveni’s regime. However, the Museveni regime, which turns 30 in January, shows few signs of weakness. Mbabazi and the Forum for Democratic Change leader Kizza Besigye have been unable to agree on a united opposition ticket, which offers the challengers the best chance of unhorsing the incumbent.

Djibouti

President Ismaïl Omar Guelleh, in power since 1999, had promised to step down before 2016’s presidential vote, but he shows no signs of planning to follow through on that.

FRONTLINE | WHAT TO WATCH IN 2016

CHINA Perm

Helsinski

Krasnoyarsk

Moscow Rotterdam

Omsk

Duisburg

Novosibirsk Irkutsk

Astana

Paris Marseille

Venice Istanbul Athens

Tashkent Samarkand Tehran

Ulan Bator

Khorgos Almaty Bishkek

Beijing Lanzhou

Dushanbe

Xi’an Chongqing

Karachi

Fuzhou

Chuxiong

Kolkata

Hanoi

Silk Road routes 21st-century maritime Silk Road Maritime Silk Road continental extension Silk Road economic belt Northern corridor Central corridor Southern corridor Secondary routes

Colombo Nairobi

Shanghai

SOURCE: CHATHAM HOUSE

Kuala Lumpur

Railway routes Silk Route trains Trans-Siberian Railway

Jakarta

One belt, one road to tie Asia to Africa and Europe

hina’s President Xi Jinping is keen to leave a global legacy. In 2013, he launched the One Belt, One Road (OBOR) programme – a reference to the Silk Road responsible for the Middle Kingdom’s wealth in centuries past (see map). It involves lending developing countries money to build ports and roads on the condition that they contract Chinese construction companies to do the work. More than 60 countries are involved, representing a third of the global economy. The ultimate goal is a seamless road and rail network between China and Europe and improved maritime links with African countries. Africa is already feeling the first wave of investment, with East African rail networks relatively high on the priority list. This is a three-for-one for Beijing. First, OBOR is a handy way of recycling excess capacity, both in terms of commodities like steel, cement and aluminium, and of China’s vast foreign-exchange reserves. Next, it is a means of keeping China’s big construction companies busy now that much of the country’s heavy infrastructure

is complete. The soft loans-for-contracts deals act as a roundabout subsidy, something French policymakers will recognise from their own use of the Agence Française de Développement. Finally, OBOR will strengthen growth and demand in targeted countries. The idea is that consumers will then buy the televisions and cars still whizzing off Chinese factory floors. There are also sceptics. Some point to China’s debtto-gross domestic product ratio of 250%, or argue that OBOR will exacerbate China’s existing imbalances and make it harder to push the economy towards a more consumer-driven model, the government’s long-term goal. What OBOR does give Beijing is global heft. The setting up of three institutions – the Silk Road Fund, the New Development Bank and the Asian Infrastructure Investment Bank – all point to a growing role for China in setting the direction for the global economy. Unsurprisingly, decisions are often influenced in the direction of the guy financing strategic infrastructure, which the West has been benefiting from for decades. ● THE AFRICA REPORT

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FOSTER+PARTNERS

No pilot, no problem

ngineers are due to break ground on the world’s first civilian cargo drone station in Rwanda in 2016. The country’s civil aviation authority is already drafting regulations concerning the use of unmanned vehicles. Architecture firm Foster + Partners has submitted artists’ impressions (pictured) of how the drone facility could look. If the pilot project is successful, a wider programme could be rolled out across the country and an additional 40 drone airports could be constructed. ●

The morning after the night before

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7,000 6,000 5,000 4,000 3,000 2,000 1,000 0

2009 2010 2011 2012 2013 2014

1,600 1,400 1,200 1,000 800 600 400 200 0 2002 03 04

Sub-Saharan Africa’s key exports (% of total exports) Others Agricultural commodities Fuel Minerals and metals Manufacturing commodities

10 37

13 27 20

49 12 10

7 2001-2004

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2010-2014

Metals price index (2002 = 100) Aluminium Copper Iron ore Nickel

05 06 07 08 09 10 11 12 13 14 15

Bond issues by country (US$ million) 8,000

Angola Côte d’Ivoire Ethiopia Gabon Ghana Kenya Mozambique

7,000 6,000 5,000

Namibia Nigeria Rwanda Senegal Seychelles Tanzania Zambia

6,250 5,100

SOURCE: BLOOMBERG, FT, DEALOGIC

Bond issuing nearly doubled from $6bn in 2012 to $11bn in 2014. Many bonds are priced in foreign currencies, and countries with dollar-denominated debt worry a strengthening greenback will increase the cost of repayment. The Overseas Development Institute is predicting the stronger dollar could cost sub-Saharan Africa an extra $10bn, amid analyst fears that a China slowdown will cost repayment headaches. ●

(US$ million)

SOURCE: BLOOMBERG, FT, DEALOGIC

COMMODITIES

Africa’s sovereign bond issue

SOURCE: WORLD TRADE INTEGRATED SOLUTIONS

frican countries building infrastructure with funds raised by issuing sovereign bonds seemed like a great idea when commodity prices were high. Now, as revenue from oil, copper and other minerals has shrunk, fears over the continent’s capacity to service its debt repayments have soared.

SOURCE: IMF, PRIMARY COMMODITY PRICE SYSTEM

DRONES

4,000 3,000

2,498

2,000 1,000 0

1,500

1,750

200 2009

2010

2011

2012

2013

2014

FRONTLINE

Potential crop catastrophes

rought for some, devastating rains for others: the United Nations Children’s Fund (UNICEF) estimates that 11 million children in East and Southern Africa are at risk of hunger and disease due to the weather phenomenon known as El Niño, caused by high water temperatures in the Pacific Ocean. As UNICEF reports, the impact of weather changes could be brutal: “Many of the countries that face the gravest threat from climate change are the same ones now bracing for the brunt of El Niño.” Ethiopia is already facing the worst drought in 30 years. South Africa’s Mpumalanga and KwaZulu-Natal provinces have been the worst hit, and there will be no grain exports to Botswana and Swaziland. Ethiopia says the government is ferrying food to areas prone to famine and Kenya has started to build camps for displaced people. ●

EL NIÑO LEON SADIKI/GALLO IMAGES/GETTY

INVESTMENT Africa’s new class pyramid

Upper class

More than $20/day

Upper middle class Lower middle class

Less than $2/day

Long-termers to be rewarded

Between $10-$20/day

Between $4-$10/day

“fFoating class”

Between $2-$4/day

20%

60% Population living below the poverty threshold

30 SOURCE: AfDB

of global business regulatory reforms in 2014-15 took place in sub-Saharan Africa, according to the World Bank. Members of the Organisation pour l’Harmonisation en Afrique du Droit des Affaires (OHADA) were particularly active, with 14 of their 17 West and Central African economies improving their business climate.

frican companies with an early-mover’s advantage and a deeper understanding of local market dynamics could benefit from a shift in international focus in 2016 as investors turn away from emerging markets amid planned rises in interest rates in the US. While Switzerland-based agribusiness is dialling back its African investment (see page 72) because it has found that the middle classes are not growing rapidly, other firms see the next few years as crucial to Africa’s economic prospects. In June, Morocco’s Saham Assurance and BMCE Bank of Africa announced that they had formed an alliance to offer joint banking services and insurance products in the African countries where the two companies operate. For its part, South Africa’s ShopRite sees the potential of the Nigerian market. In August, chief executive Whitey Basson said that the supermarket will open 14 new Nigerian stores and a distribution centre within the next year and a half. The firm also has its eyes on the Angolan retail sector. In construction, Nigeria’s Dangote Cement is continuing its continental expansion. It has plans to open a new plant in the Democratic Republic of Congo in 2016 and another in Kenya in 2017. ●

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LIBYA

WHAT TO WATCH IN 2016 | FRONTLINE

IS rebels swoop on divided state

he worsening confrontation in Libya is being fought militarily, politically and commercially, and will have consequences far beyond the country’s borders in 2016. Islamic State (IS) militants have been exploiting this crisis, with Western intelligence officials reporting the organisation is building up quickly in Libya. Already, the battle between the internationally recognised government in Tobruk and the General National Congress coalition in Tripoli – under the control of sundry Islamist factions – has effectively partitioned the country. The Tobruk government has reached an agreement with the United Arab Emirates to sell Libyan oil independently of Tripoli, and the two sides are battling for control of the country’s sovereign wealth fund, with well over $100bn at stake. More dissident groups have emerged in recent months, complicating the work of the United Nations team trying to negotiate a power-sharing deal. So far, five deadlines for a political agreement have passed without any substantial progress. Without a deal, divisions between the

TRIPOLI

Sabratha

western region of Tripolitania and the east’s Cyrenaica are deepening. Meanwhile, political factions in the south are choosing alliances on an ad hoc basis. Several intelligence reports suggest that IS may be moving its key people by sea to the coastal city of Sirte in Tripolitania as Western military forces step up their bombing of its main base of Raqqa in Syria. The Iraq- and Syria-based militia has a working relationship of sorts with some Islamist groups in the Tripoli government. By mid-November, IS was reckoned to have at least 2,000 fighters in Libya, most of whom were in the east nearer to the border with Egypt. Some of the group’s combatants appear to be targeting Adjabiya, a strategic city on the route between some of the main oil fields and export terminals. Not only will the group’s growing strength in Libya allow it to intensify operations in North Africa, but it will position it to push further south into the Sahel. There, it could co-opt the jihadist groups already threatening security in Mali, Niger and Mauritania. ●

Derna

Mediterranean Sea

Misrata

TUNISIA

TOBRUK Benghazi

Sirte Nofaliya

Ajdabiya

EGYPT

Sabha

ALGERIA

Ubari

Kufra

from sub-Saharan Africa

200km

NIGER

The threat of Islamic State (IS)…

…in torn Libya ACTORS

Territory controlled Sphere of influence

Parliament of Tripoli (General National Congress)

Influx of fighters from Syria, Iraq and sub-Saharan Africa

Parliament of Tobruk (Recognised by the international community)

American air strikes against IS on the night of 13 and 14 November THE AFRICA REPORT

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Jihadist stronghold

WHAT’S AT STAKE Zone:

Oil fields

Tuareg,

Oil pipelines and gas mains

Tubu,

Roads

Amazigh

Arms dealing

SOURCE: LE MONDE, AFP, CRISIS GROUP, INSTITUTE FOR THE STUDY OF WAR

from the Iraqi and Syrian fronts

FRONTLINE | WHAT TO WATCH IN 2016

NIGERIA’S OIL

ith oil accounting for 95% of exports in Africa’s biggest economy, Nigeria’s state oil company faces its biggest shake-up ever. Ending rackets estimated to cost more than $20bn a year is the top priority for President Muhammadu Buhari. He was elected in March 2015 and has been struggling with a 50% fall in oil prices. The reform campaign will be an historical reckoning: Buhari helped to found the Nigerian National Petroleum Corporation (NNPC) in 1977 when he was oil minister in a military regime. He speaks of his frustration at seeing the chaos and corruption at the corporation since then. A sweeping reform in the shape of the Petroleum Industry Bill has been stuck in the national assembly since 2008, blocked by heavy lobbying from local and foreign vested interests. This mega-bill aims to make the giant company more accountable by splitting up its policy and commercial functions as well establishing an independent regulator for the oil and gas industry. It would also allow the NNPC to fund its operations by raising cash on local and foreign money markets instead of relying solely on the state budget. This requires full transparency and independent audits of the corporation’s estimated $100bn in annual revenue. Now the government’s plan is to break the reform bill into different sections: the first, due in early 2016, will establish separate NNPC units for oil and gas production (upstream activities) and refineries and petrochemical plants (downstream). Two massive new refineries, to be financed commercially, are in the works. The next stage of the reforms, due later in the year, aims to help raise much of the $50bn needed to boost gas production, which will power most of the new private power stations. ●

Taking on the oily-garchs Nigeria’s new look NNPC Political controls

Contractual relations

Regulatory controls

2015

MUHAMMADU BUHARI President and minister p of petroleum

EMMANUEL KACHIKWU M Minister of state for ppetroleum

Department of petroleum resources

NNPC – Directors and management NNPC – Upstream oil production Oil companies (international and Nigerian)

NNPC – Downstream oil production (refineries, petrochemicals and gas subsidiaries) NNPC – Oil and gas ministry regulation

2016

MUHAMMADU BUHARI President and minister of petroleum p EMMANUEL KACHIKWU M Minister of state for ppetroleum

Department of petroleum resources

Independent oil and gas industry regulator

NNPC Directors and management

NNPC Upstream

Privatised downstream companies

NNPC Downstream

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Oil companies (international and Nigerian)

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ANIMATION

EVCL STUDIOS

Drawn in Africa

frican animators’ time has come. After being overlooked for decades, with traditional film a preference for investment, its commercial potential is starting to be tapped by advertising agencies, and artists are finding more opportunities to make a sustainable income from their creations. A growing number of homegrown studios are developing and establishing themselves competitively so that animators, graphic designers and other artists no longer have to cross the world to work at high-quality studios. South Africa’s Triggerfish is one studio that is shifting gears. In 2016, it will launch Triggerfish Story Lab, an 18-month mentorship programme for feature film and television scriptwriters with a R42m ($3m) prize partly funded by Disney. The venture marks another step towards creating and showcasing more diverse stories from across the continent. Filmmaker Wanuri Kahiu from

Kenya and Nigerian-American author Nnedi Okorafor’s partnership on two features – Zahrah the Windseeker and The Camel Racer – has landed them on the shortlist. Cartoons for children – like Bino & Fino, by Nigerian animation studio EVCL – are providing a more relatable reflection of the children they seek to entertain and educate. Even star duo P-Square have plans to dip their toes into animation with their cartoon for kids, The Alingos. In October 2015, the second West African Gaming Expo was held in Lagos with the aim of developing more local talent and encouraging stories related to the environment in a city that is bubbling with animation studios. In Cameroon, Kiro’o Games – Central Africa’s first games studio – had a successful Kickstarter campaign to fund its debut, Aurion: Legacy of the Kori-Odan. Gamers and game makers will be keeping an eye on its much-anticipated launch in the first half of 2016. ●

Threats call for extra vigilance

IMGUR.COM

s Guinea entered the final countdown to be classed Ebola-free by the World Health Organisation (WHO) in late 2015, scientists were already warning of new threats to the continent’s fragile healthcare systems. A study published in the journal Nature Communications warned that a drugresistant malaria parasite, which has spread rapidly through Southeast Asia, was able cross the species barrier from Asian mosquitos to Africa’s dominant species, Anopheles coluzzii. Epidemiologists fear a rapid spread of the parasite, which has rendered the world’s primary anti-malarial drug, artemisinin, useless.

HEALTH

As if the prospect of one pandemic was not enough, new research into Middle East Respiratory Syndrome (MERS), found that almost half of Kenya’s population of camels were infected.Last year, the WHO warned that Africa needed to defend itself better against an outbreak of MERS, for which there is no vaccine or treatment, citing concerns that African pilgrims participating in the Hajj in Saudi Arabia could return with the disease. Shouldahuman-to-humanstrainmutate with one carried by Kenya’s camel population and spread, the coronavirus could become “a threat to the entire world,” the WHO reports chillingly. ●

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WHAT TO WATCH IN 2016 | FRONTLINE

CALENDAR 2016 OFFSHORE WEST AFRICA 26-28 January

AfDB ANNUAL MEETING 23-27 May

LAGOS | NIGERIA offshorewestafrica.com

LUSAKA | ZAMBIA afdb.org

CORPORATE COUNCIL ON AFRICA SUMMIT 1-4 February

AFRICA ENERGY FORUM 21-24 June

CAINE PRIZE FOR AFRICAN WRITING July

INVESTING IN AFRICAN MINING INDABA 8-11 February

OXFORD | UK www.caineprize.com

CAPE TOWN | SOUTH AFRICA miningindaba.com

POWER-GEN AFRICA 19-21 July CAPE TOWN | SOUTH AFRICA powergenafrica.com

AFRICA CEO FORUM 21-22 March ABIDJAN | COTE D’IVOIRE theafricaceoforum.com

AFRICA-SINGAPORE BUSINESS FORUM August

NTH

WORLD ECONOMIC FORUM ON AFRICA 11-13 May

SINGAPORE https://www.asbf.sg

KIGALI | RWANDA weforum.org

UN GENERAL ASSEMBLY 13-26 September

AFRICAN INSURANCE ORGANISATION CONFERENCE 8-11 May

NEW YORK | US un.org

AFRICA HOTEL INVESTMENT FORUM

MARRAKECH | MOROCCO african-insurance.org

ZHAI JIANLAN/XINHUA-REA

LONDON | UK africa-energy-forum.com M

ADDIS ABABA | ETHIOPIA summit.africacncl.org

AFRICAN UNION SUMMIT 28-30 January ADDIS ABABA | ETHIOPIA Perhaps Zimbabwe’s president Robert Mugabe has been softened by his year as chairperson of the African Union: as he bows out at the 26th summit, in January 2016, the organisation launches its “Year of Human Rights with a Special Focus on the Rights of Women”. The application of human rights frameworks in conflict resolution will top the agenda, as will the fight against terrorism.

5-6 October KIGALI | RWANDA africa-conference.com

WORLD BANK/ IMF ANNUAL MEETINGS 7-9 October WASHINGTON DC | US imf.org

AFRICA OIL WEEK 31 Oct. – 4 Nov. CAPE TOWN | SOUTH AFRICA oilgas-events.com

AFRICA COM 15-17 November CAPE TOWN | SOUTH AFRICA africa.comworldseries.com

2016 PRESIDENTIAL ELECTIONS A bumper year for elections lies ahead. In 2016 exactly a third of Africa’s 54 countries will go to the polls to elect heads of state – a population that, if it stood in a single line waiting to vote, would almost encircle the globe! The application of democracy is impressive, but will this be the year of regime change too? In Uganda (February), Chad (April), Congo-Brazzaville (July), Gabon (August), Equatorial Guinea (November) and the Democratic Republic of Congo (November), long-running leaders have theatened to run again, but who knows what the future may hold? For our election roundup see page 22. THE AFRICA REPORT

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2016 manifesto The people’s

From Cape Town to Casablanca, The Africa Report took the continent’s temperature, talking to everyone from shoe sellers to politicians and financiers to identify their policy priorities and what issues they want to see making headlines in 2016 By Celeste Hicks in Rabat, Billie Adwoa McTernan in Accra, Crystal Orderson in Cape Town, Jeff Mbanga in Kampala, Reinnier Kazé in Yaoundé, Elias Meseret in Addis Ababa and Nicholas Norbrook

hen the angry crowds overthrew the leaders of Tunisia and Egypt inearly2011,themessage to tyrants worldwide was clear – when the people have had enough, you will go. Similar ‘red cards’ have been brandished in Senegal and Burkina Faso since then. And even if there is a hard core of constitutiontampering presidents keen to cling on to power at all costs, the majority of African governments are now far more attuned to the desires of their populations than in previous decades. So what do the people want? We asked correspondents in Cameroon, Ethiopia, Ghana, Morocco, South Africa and Uganda to speak with people from all

walks of life: farmers and businessmen, politicians and security guards, housewives and pharmacists. And even though these are just 50 Africans interviewed out of more than one billion on the continent, the results are remarkably consistent. All talk about the need for better public services, be they reliable and cheap buses to get them to work or health and education provision, which everyone agrees are essential for a modern and forward-looking Africa to take full part in the century ahead. All talk about the end of impunity. Corruption weighs heavily on their minds, while some see progress and others backsliding. Almost in the same breath, they mention security – personal security, the need for peace and an end to corruption in the police.

All talk about the need for greater political dialogue. In the new era of smartphones and mass mobilisation, politicians cannot simply preach from on high. They need to talk to each other, too, tackling serious regional and national questions before they boil over into conflict. And forefront in everyone’s minds is the urgent need to create more jobs and reboot faltering economies. Health services are near the top of the priority list. Célestin Djamen, an opposition politician in Cameroon from the Social Democratic Front, calls for universal healthcare – a call echoed by compatriot Vaksa Hakda, a student and shoe seller in Yaoundé, who says: “You have to pay for public hospitals, and few get bills reimbursed.” Gerald Ataremwa, a graphic designer from Uganda, suggests better health insurance is a good halfway house between a free public service and costly private clinics: “I don’t care if I have to pay for it.” FAILED BY PUBLIC SERVICES

Soumia Amrani, a Moroccan mother of three, wants her government to look out for those often ignored by planners in the health services. “I am disappointed. My daughter, who is aged 22, is autistic. I haven’t seen any attempt to set up new services for disabled people.” ● ● ●

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ILLUSTRATION BY YASMINE GATEAU FOR TAR

POLITICS

● ● ● Education is also a key desire. What Africa wants Andrew Muhimbise, a fund manager in Uganda, argues that many people rePUBLIC SERVICES While the fight over who main unemployable because they lack should pay will continue, getting transport, the right skills: “We need to break this water and power fixed is a top priority. idea that a technical path is for losers!” Again, the question of who should DIALOGUE People are tired of echopay for education is at the forefront of chamber politics – they want leaders concerns. Those who can flee the public who will listen to them, but also politicians school system. Sana El Ouali of Morocco, able to talk to each other regardless who works for a development bank, comof party lines and national boundaries. plains: “We all have to send our children to private schools because the public CORRUPTION A call for an end to impunity schools are so bad.” reverberates across the continent with It is also clear that government services impatience and anger rising, and it reaches need to be joined up. “Some months ago, from the home right up to the head of state. the vice-president’s wife went to donate some computers to a school that didn’t SECURITY Time for African governments even have electricity,” says Ghana’s Nii to put this at the top of their agenda. Ayertey Aryeh, an activist. “They didn’t Repairing Africa’s police forces is a good even have chalk.” His compatriot, Kofi place to start and the judiciary next. Owusu-Ansah, the owner of Republic Bar and Grill in Accra, agrees: “Without JOBS From improving the business power how can we educate our children? climate to delivering on regional economic Our kids can’t study in the dark.” integration deals, there is a backlog The need for governments to be more of actions to be taken in order to deliver responsive to their citizens is clear. But desperately needed jobs. there are calls from the grassroots for political dialogue at the top, too. For Ethiopian banker Biniam Major, “the major problem the country is facing right And nepotism is a recurring theme. now is the lack of respect for dissenting “We need to stop centralising money opinion at the higher political levels”. and power,” says Ronald Tashobya, a He says that having a real opposition Ugandan businessman. “Unless you party in parliament would “solve food know someone who knows someone, security and other related problems”. you cannot do much in this country” ForGhana’sAryeh,astrongdemocracy – and, indeed, the same appears to be is important. But it could be tweaked, true in all six of our surveyed countries. giventhecontext:“Ourinstitutions are not so strong. So “Without power, how can we wheneverthereisachangeof educate our children? Our kids power, everything comes to can’t study in the dark” a halt. There is so much acrimony between the parties. I would advocate for a longer term [for Some are optimistic. In Morocco, sepresident].” That way, he says, you would curity guard Hamid Ayachi applauds get fewer “vote-winning white elephants”. the governing Parti de la Justice et du Développement’sapparentlackofcorrupNEPOTISM, TRIBALISM tion. “For example, the current minister Politicians also need to stop stoking of transport has a brother who tried to trouble. “Some Kenyan friends are worbuild on some land illegally. The police ried that tensions [between Uganda’s came to stop him. He called his brother, President Yoweri Museveni and his rival but his brother wouldn’t help. That is AmamaMbabazi]couldleadUgandainto important to many Moroccans.” the kind of chaos Kenya saw in 2009,” More often, views are less sanguine. Ethiopia’s Biniam sees corruption in the points out fund manager Muhimbise. Fellow Ugandan William Opar, a security health and education system, “which guard, says “the government’s habit of amounts to gambling with the lives of the favouritism, nepotism and tribalism” is next generation”. Fellow Ethiopian Girma Waku says: “I hear that it is rampant in exacerbating the situation. the land administration. […] I realise Corruption is one of the first issues also that there are some unfair practices out of the mouths of our respondents.

in fertiliser distribution procedures.” He does, however, praise his government on the whole: “There used to be a time when I struggled to feed my whole family, but now I’m comfortably providing for all of them. This is due to the great support that we are getting from the government in terms of accessing loans for fertiliser and other inputs.” There is no such luck in South Africa. Steven Swart, a politician with the African Christian Democratic Party, points to a “high level of fraud and corruption in procurement by state departments”. LINING POCKETS

It is a similar story in Ghana: “They should stop using the country’s money for their personal stuff,” says musician WanlovtheKubolor.InCameroon,Hakda points out: “[There is] frequent theft of public money and many ministers and ex-ministers and heads of state enterprises who are banged up in prison for their presumed thievery.” For her compatriot Claude Assira, a lawyer, the country needs “a new horizon – a new moral and ethical compass”. The Republic’s Owusu-Ansah agrees: “We need to be more accountable as a people, and that starts from government all the way to the average person.” Many respondents in South Africa say they would prefer the government to prioritise personal security over issues like nationalising the country’s mines. For Ayachi in Morocco, a former policeman, the police are part of the problem. “If you call them, they won’t come. There are also too many thieves and bad people on the streets and not enough police.” Food security is just as important for many. In Ethiopia, our respondents on the whole call for a greater focus on food rather than political pluralism. “In Ethiopia, fulfilling food needs is the missing element – I struggle to get everything I need,” says a lecturer at Mekelle University who requests anonymity. “The question of food sufficiency has a lot more relevance to me than having an opposition party in parliament.” The link between security and jobs is made by South African barista Luvuyo Sizani, who says: “Unemployment is the big issue.” Fixing the economy – and thereby creating jobs – is another big priority for the citizens who contribute to our ‘People’s Manifesto’. This starts at the top, with the business environment created by the politicians. “The heaviness of government regulation

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hasgiventheCameroonianeconomyfeet of lead,” says shoe vendor Hakda. Though many trumpet reform in, say, regional integration, the results are not evident.“DoingbusinessinUgandaisstill as hard as it was before all those common market protocols were signed,” says businessman Tashobya. “They are collecting dust on government shelves. Just look at the controversies like that between Uganda and Kenya over the day-old chicks, where Kenya imposed all sorts of licences.” South Africa’s Swart agrees, saying that what business wants more than anything is certainty: “The recent [Kenyan/Tanzanian] visa regulation debacle illustrates how policy uncertainty negatively affects economic growth – in this case of the tourism industry.” A FARMING REVOLUTION

The cost of power, water and accessing finance are cited across the board. For some, the focus should be on the sector where the majority of Africans are employed, in the fields and farms that stretch across the continent. “We need an agriculture revolution,” says Samia Nkrumah,

Swart wants more heft given to a daughter to the country’s founding crime-fighting agencies. Muhimbise president and a leader of Ghana’s Con– the Ugandan fund manager – wants to vention People’s Party. “The majority of end Africa’s ‘giveaway’ tax holidays, while our farmers are small-scale. They need our university lecturer in Ethiopia wants capacity building and access to loans.” Others, like Wanlov,point tothestrategies politicians to see beyond the capital city. that Samia’s father put in place more than This is echoed by Morocco’s Ayachi: “The 50 years ago: “If these parties that have government needs to expand infrastructure development to other parts of the been changing over and over stuck with [Kwame] Nkrumah’s plan, Ghana would country and to the peripheries of Addis be in a much better place.” The many people sur“We have to sort the justice veyed for this manifesto system and ensure that the have plenty of suggestions punishment fits the crime” that policymakers should pay attention to. Ugandan Ababa. And that infrastructure needs to graphic designer Ataremwa says there should be fewer members of parliament. be sound. There are many buildings that According to him, only 20 out of the 300 are constructed without proper foundsitting legislators are active: “The rest ations and we often hear about them earn money for nothing”. Raising the collapsing and injuring people.” heat on wrongdoers is important for Pat But, ultimately, good ideas are not Fahrenfort, a South African author. “We enough; so much hinges on delivery. As Fahrenfort says: “The African National have to sort the justice system and ensure that the punishment fits the crime.” Congress has developed very good Cameroonian oppositionist Djamen puts policies. Until they reach the implementforward “tax breaks for young companies ationstage,myoptimismremainspegged for at least two years”. on the washing line.” ●

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EFF supporters took to the Johannesburg streets in October

SOUTH AFRICA

The heartland is burning

Student and worker protests in Gauteng suggest the ruling ANC may be losing its grip on the country’s richest province ahead of next year’s local elections

t is the year of the student revolt. First, testers had won and the government had in Cape Town the students took to the backed down, there was a heavy police streets with one aim and one slogan: presence on the campuses in Gauteng. “Rhodes must fall.” And fall, Rhodes did Students were preparing for exams – at least the statue of the arch-imperialist but many hit out at the ruling African was finally dragged off by a crane in April. National Congress (ANC) for its handling of the protests on fees and workers’ conIt had perched somewhat incongruously in the grounds of the University of Cape ditions. The campaigners highlighted Town, which had prided itself as a basthe situation of workers on contracts tion of liberal and progressive thinking. with private companies hired to run university services. Some workers comThis victory whetted the appetite plained they face a double threat: the of the students. Six months later, they private companies had been pushing launched a much more politically significant campaign against the government’s plan to ‘Born frees’ have seen massive raise tuition fees at univerchanges in their lifetimes sities and the universities’ and have higher expectations treatment of workers. This time, the protests down their wages and the workers had started in Gauteng, South Africa’s richest and most populous province. The nerve to pay higher fees for their children centre of the campaign was at the Unito attend college. versity of Witwatersrand, with its main We spoke to 20-year-old Lerato campus in Johannesburg. As the protests Lehoko and 19-year-old Hlonepho took off, so did the police response. Phakoe from Soweto, both second-year students at Wits. They felt ignored and Officers fired tear gas and stun grensaid they would vote against the ANC ades, sparking pitched battles. in next year’s local government elecIn November, the universities still seemed under siege. Although the protions. “We are going to vote, but the

ANC disappointed us. They have been taking us for a ride,” said Lerato. “The student uprising will impact on the way students will vote. It’s not just the party, but the system, that I am disappointed with,” added Hlonepho. TIPPING POINT

Lerato and Hlonepho are ‘born frees’ – people born after South Africa had its first democratic election in 1994 – and the ANC is the only government they have known. Although they have seen massive changes in their lifetimes, they have higher expectations that are thwarted by inequality. They are furious about the barriers poor people face going to university. “This is the tipping point. Things are going to get messy, and students are going to be at the forefront of change,” said Lerato. Several other students echoed such sentiments. “They didn’t take our protest seriously. We youth are the majority in the country, and we will bring about change in some way or the other,” another student commented. The ANC was shocked by the protests in Gauteng and among students ● ● ●

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elsewhere. It eventually moved to cut a deal, giving the campaigners a symbolic victory. The students’ cause was celebrated across the working class in the province, which demands the freeeducation and jobs that the ANC had promised. Even longtime ANC loyalists no longer take victory for granted in Gauteng in next year’s local elections. In a frank assessment at the party’s National General Council, secretary general Gwede Mantashe said that the ANC would “suffer a psychological impact” if it should lose the province. ANC activists in Gauteng know the student revolt has hit their support base. Professor Susan Booysen, a political scientist at Wits University, says the student revolt has mobilised many other groups: “There is a much more rebellious, confrontational mood amongst other forces in the country, and the ANC feels threatened.” The ANC’s Gauteng chairman, Paul Mashatile, reiterates the message about the province’s importance for his party and the message of the student revolt. “As we move into local government elections, we are very conscious of that – that the ANC can’t lose that place. Because if it does, it’s the beginning of the end,” Mashatile tells The Africa Report. Once dismissed as an opposition fantasy, the possibility of the ANC losing control of the major cities in Gauteng – Johannesburg and Tshwane/Pretoria – is now openly discussed. ●●●

THE ANC IS WORRIED

Booysen says this would seriously damage the party at the national level: “If Gauteng falls, it will have a devastating effect on the ANC. This is the heartland. It is the other seat of government. It will pull the rug out from under the ANC’s feet. Deep down they are worried.” With a voter turnout of almost 73% in the 2014 national elections, the ANC won just more than 53% of the vote in Gauteng – the poorest result since taking power in 1994. The Democratic Alliance (DA) managed to win just over 30% of the vote, with the new kid on the block, Julius Malema’s Economic Freedom Fighters (EFF), winning more than 10%. Although smaller parties sometimes struggle to find the money and the activists to run their local election campaigns, they are often closer to the issues that local communities see as important. A closer look at the breakdown of voting trends in the big metropolitan

Gauteng in facts and figures ➔ Meaning: City of gold (in Sesotho) ➔ Capital: Johannesburg ➔ Premier: David Makhura ➔ Languages:19.8% isiZulu, 13.3% English, 12.4% Afrikaans, 11.6% Sesotho ➔ Population: 12,272,263 (2011) ➔ Share of South Africa’s population: 23.7% ➔ Urbanisation rate: 97% ➔ Area: 16,548km² ➔ Share of South Africa’s total land area: 1.4%

SOURCE: SOUTH AFRICAN YEARBOOK

and all of them came from Gauteng. And that is a serious indication of the support we have here.” ANC campaigners want to strengthen the party’s base. Mashatile, whose life as an activist in the sprawling township of Alexandra shaped his political career, explains: “In areas, we’re going back to basics to engage with the communities […]. The ANC, for instance, has decided corruption is going to be the number one enemy. We must be seen to be dealing with it ourselves – not just shouting slogans but real action when people mess up. We must be seen to be acting without fear of anyone.” For the DA, Moodey and his officials hold weekly focus groups on how to build the party’s membership and get the vote out, especially in Gauteng’s outlying areas. “We are putting our money and energy where we are able to reap the best benefits,” says Moodey.

areas must worry ANC strategists. In the 2014 election, the city of Johannesburg’s votes for the ANC dropped by 10.1% to 52.3%. In the Tshwane metroSTAYING IN TOUCH politan municipality, the ANC’s votes For Mashatile, it is also important to fell by 10.6% to 49.3% and by 11.7% to show voters that the party is in touch: “Let’s listen to the people and say their 55.1% in Ekurhuleni. concerns are legitimate. Let’s work toAfter studying the figures, the DA gether and try to resolve issues.” The reckons it could win at least three out party is also focusing its attention on of the 10 municipalities in Gauteng. It the black, middle-class voting block. believes it could take Tshwane (which Gauteng has the largest black middleincludes Pretoria) and Johannesburg, making inroads in Ekurhuleni and holdclass electorate: some 45% of black ing onto its only municipality in the South Africans classified as middleprovince, Midvaal. class live in the province. “On any given day, we have 2,000 South Africa’s middle classes are now voicing opposition on issues such volunteers across the province doas the slow pace of economic transing door-to-door campaigning, faceformation, inflation, the costs of doing to-face interactions with voters and business, toll roads and corruption. we are dispelling the notion we are a Mashatile says the ANC understands white party,” says John Moodey, the DA leader in the province. Moodey, who hails from South Africa’s middle classes Johannesburg, says everyare voicing opposition on the one was surprised when the DA started seriously biting slow pace of transformation into the ANC’s vote in 2014. these changes: “We’re going to be He adds: “My driving motivation is to engaging with the middle class. They break the camel’s back, and it is not must understand that we do care about impossible to dream to win.” their challenges because we don’t But the DA also has to contend with want to say to the middle class, ‘Well, a more radical rival party: the EFF. In October, the EFF showed its convening you guys are fine, we are only worried about the guys in the informal settlepower by organising a massive demonstration in Johannesburg to march for ments.’ No, we must understand that economic change. they also have issues.” The EFF is confident about Gauteng, At the same time, the EFF will be going according to EFF spokesman Mbuyiseni after the ANC from the left, campaigning Ndlozi: “We want to win all the munifor all those that have been left behind cipalities – that is the prospect. We put in Gauteng. The EFF’s Ndlozi explains: 50,000 bodies on the streets in October “The sands have shifted for those ● ● ● THE AFRICA REPORT

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POLITICS

● ● ● that are advocating for neoliberal policies. People have come to appreciate the issue of economic freedom […]. We are on the ground to uproot neoliberal issues by the self-hating ANC.” But as strategists from the three leading parties – the ANC, the DA and the EFF – ponder how next year’s local votes will shape the national balance of power, they should listen to those trying to eke

out a living on the margins of Gauteng’s supercharged economy. Zacherah Deliah, 65, is supposed to be enjoying his pension, but with two children at university he says he has no option but to drive a taxi to make ends meet. “We thought our life would be better under ANC rule. The ANC is our party, but nowadays people’s lights and water are switched off. It’s too much.”

Although Deliah has lived through the dramatic political changes of the past three decades, his experience typifies the many who feel their communities are getting a raw deal as the country’s economic problems mount. If those complaints are translated into votes, the country’s political landscape is in for some radical change. ● Crystal Orderson in Johannesburg

INTERVIEW

Paul Mashatile

LOANNA HOFFMANN/FOTO24/GALLO IMAGES/GETTY IMAGES

Chairman, African National Congress in Gauteng

The ANC must always listen to the people Gauteng’s ruling party chief says the province has to anticipate the rise in demand for services like education, and must talk and listen to the middle classes TAR: What does the October student revolt mean for Gauteng? PAUL MASHATILE: The whole of the African National Congress (ANC) said that the doors of learning and culture shall be open. And now we have more who are getting into higher education, tertiary and technical colleges. So the issue of access has been sorted out, in a sense. But now the facilities and resources are not able to keep up with that demand. And that’s what underpins the students revolt – that they aren’t able to afford the fees. Even though it was growing, it was not for everybody. And we in Gauteng have more universities, so people are going to feel it a lot. There’s no going back now […], we have to have more facilities. As you sort out the problems of the past, you know people want more

and more innovation. They’re doing better things. If we get all the children into school, the demand tomorrow will be we don’t have iPads. So we must be ready for that. What will be your focus areas as we head to the 2016 local government election? Our focus is going to be particularly in Tshwane and of course Johannesburg. I think that’s where most opposition parties are focusing on. But we are confident that we will stand the test of time. What gives us confidence is because of the way we work now. The opposition parties are going to struggle to convince people that we are not the right party. Does the black middle-class voting block worry the ANC? Yes, it does worry us. Our approach is that people want to be listened to – they’ve got views. And we must remove the notion that the ANC doesn’t care. If you look at the way we’re handling the e-toll issues [...] although we were not responsible for [bringing in tolls] THE AFRICA REPORT

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in Gauteng, we were able to say we are listening to the people. And we said that the concerns are legitimate. Let’s work together and try to resolve it. We’re going to be engaging a lot with the middle-class people. You must be sensitive and engage with them. Is Gauteng the ANC’s problem child, always challenging the party on certain issues? What must come first is the people, not our own egos. So if somebody somewhere in the ANC is not happy with what I say […] my fallback is: ‘Are the people happy?’ Because they are the ones who kept the ANC, not individuals in leadership positions. We must not lose them. It’s not as if the region, Gauteng, is being deviant. You are simply reacting to what you know, andwhatyourbranchesandmembers are engaging in, and you’re willing to actually take on those issues and fight for them. But at the end of the day, the ANC exists because people support it. The ANC must always listen to the people. ● Interview by C.O. in Gauteng N ° 76

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POLITICS

INTERVIEW

Thabo Mbeki

Former president of South Africa

Where is the voice of Africa? South Africa’s Mbeki talks to The Africa Report about African diplomacy, the economic slowdown and the fight against illicit financial flows

hereisapalpablenostalgia for the Thabo Mbeki era – not just in South Africa, with its worsening economic position as the ruling African National Congress (ANC) comes under growing political pressure, but also across Africa, where so many lament that the continent lacksbothavoiceandaplan.Seven years after he resigned as president of South Africa, when the ANC’s national executive backed Jacob Zuma, Mbeki is busier than ever. He is mediating in Sudan’s many wars and chairing a UN-backed panel investigating the more than $50bn in illicit financial flows out of Africa each year. It may be that the legacy of Mbeki, lambasted at home for his government’s HIV/ AIDS policies, will prove stronger in pan-African affairs than in his own country’s development. In fact, the strategic sense that Mbeki brought to negotiating a transition with the National Party and its apartheid chieftains in South Africa also informed his

JON HRUSA/EPA/CORBIS

TAR: Many activists and politicians complain about the lack of an African voice, for example in negotiations on development finance and on climate change. Do you agree? THABO MBEKI: Yes, the complaint is that the leadership has weakened on the continent. That what you saw in the past with the emergence of the African Union [AU], the New Partnership for African Development [NEPAD] and the African Peer Review Mechanism was a much more forceful leadership that represented the African positions [...] but that has kind of died away. I don’t know whether it’s true or what impact it has. In practice, you don’t have too many pan-African champions. People seem to have been too exclusively absorbed by what they should do with each of their countries. If you talk about NEPAD, the Peer Review Mechanism – the enthusiasm and the drive that used to be behind those things doesn’t seem to be ● ● ●

ideas for new pan-African institutions. There was a flowering of continental diplomacy following Mbeki’s election as South Africa’s president in 1999. Part of the reason was Mbeki’s determination to redraw Africa’s relations with the UN, World Bank and International Monetary Fund, and with Asia and the West. He wanted todevelopanAfricanposition,despite the differing interests among the continent’s 53 states, which would strengthen its economies and consolidate democratic gains.

“The [pan-African] institutions haven’t died by any means, but something has changed” By happy coincidence, in 1999 Olusegun Obasanjo, an old friend of Mbeki’s, won the presidency in Nigeria,endingacoupleofdecades of military despotism. They made common cause with Abdoulaye Wade in Senegal and Abdelaziz Bouteflika in Algeria to get African countries working together. THE AFRICA REPORT

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POLITICS

there. The institutions haven’t died by any means, but something has changed.

hold of the UN, raise this thing with them and we will resolve this thing.’ So I said OK. I contacted the UN and said: ‘This is the possibility, personally I support it and I’m sure that if I talk to other former heads of state on the continent they will support this. So let’s stop all this bombing and let the Libyans sit down,’ and so on. They said: ‘Yes, yes, yes, we will come back to you, President.’ But they never did.

in Mauritania, which was the chair of the AU. From Mauritania, they were going to go to Libya. But they were stopped by NATO [which told them]: ‘If you come now, your plane might be shot down [...] because we are beginning our military operations.’ So they couldn’t go.

●●●

In 2000, it was you and Olusegun Obasanjo. Who is speaking for Africa now in negotiations with the international system? That’s the sentiment that’s expressed right across the continent. Where is the voice? And people feel that somehow it’s disappeared, this African voice. You have people who will say… if we take the issue of Libya and the decisions of the UN Security Council in 2011, as a result of which the North Atlantic Treaty Organisation [NATO] went in and did all that bombing… that that would never have happened at an earlier time. There would have been much better respect on the part of the UN Security Council for African opinion.

Could they have persuaded Muammar Gaddafi to stop attacking the opposition? Gaddafi had agreed. They had spoken to him to say that there is a need to resolve this conflict in Libya so all of you Libyans need to get together. Stop all the fighting and decide on a new Libya, plus you, Colonel Gaddafi, you then have got to have a programme by which you disappear into the sunset. And he agreed. Then the UN Security Council intervened the way it did. Romano Prodi [Italy’s former prime minister and UN envoy to the Sahel] had been in contact with the Libyan factions – the Gaddafi and Bengazi people, the tribal chiefs – and all of them were saying: ‘Let’s find a solution, we are ready to meet.’ So Prodi said: ‘Can you please get

What happened to the African Union initiative on Libya in 2011? They completely ignored it. There was this panel of five heads of state chosen by the AU to go and mediate that Libyan conflict. They were meeting

“I contacted the UN and said: ‘Let’s stop this bombing.’ They said: ‘We’ll come back to you’” How should Africa react to the international slowdown and what are the risks? This current global situation should emphasise the need for faster and more effective regional cooperation among ourselves as Africans. If you had better cooperation in the Southern African D e ve l o p m e nt C o m mu n i t y [SADC] region, it would create space for industrialisation and restructuring of the economy. In the context of the free trade area in the SADC region, one of the dangers that South Africa faced was that tyre manufacturing would migrate out of South Africa into countries that were already producing tyres – Mozambique and Zimbabwe. You might have South Africa lose its tyre manufacturing but if Mozambique or Zimbabwe gain, the region gains from that and you get better industrialisation.

THE COST OF CORRUPTION 13%

28%

West Africa North Africa Southern Africa

11% 10%

Eastern Africa Central Africa

(1970-2008)

38% Oil Precious metals & minerals Ores Electrical machinery & equip. Fruit & nuts Copper Iron & steel Cocoa Apparel & clothing Fish & crustaceans

Africa’s biggest losers SOURCE: KAR AND CARTWRIGHT-SMITH 2010

Illicit financial flows by region

SOURCE: ECA

Cumulative losses by country 1970-2008 (US$bn)

Nigeria 217.7

Cumulative losses through trade mispricing by sector

Egypt

(US$bn, 2000-2010)

105.2

South Africa 81.8

Trickle becomes a flood (US$bn)

100 80 60 40 20 0

Morocco 33.9

2000

2001

Kar and CartwrightSmith

2002

2003

2004

2005

Kar and Cartwright-Smith trade mispricing only

2006

2007

2008

ECA’s methodologytrade mispricing only

Côte Sudan d’Ivoire 16.6 21.6

Angola 29.5

Ethiopia 16.5

Algeria 26.1

Congo 16.2

THE AFRICA REPORT

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Is Africa integrating its markets effectively? If you take Nigeria, there is a free trade area in the Economic Community of West African States. In practice, the movement of people has become much better, much easier. But for the movement of goods and trucks, there are still lots of obstacles. If you had a more effective free trade zone in West Africa, you can imagine what it would do in terms of the size of the market for Nigerian manufacturing. You have got this agreement ● ● ● N ° 76

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DEAN HUTTON/BLOOMBERG/GETTY IMAGES

now – the Common Market for Eastern and Southern Africa. The East African Community and SADC launched this free trade area from Cape to Cairo. I don’t know how many hundreds of millions of people that is. ●●●

You have got the issue of illicit financial flows onto the international agenda now. What’s the progress? For Africa, it is a strategic issue. So the African finance ministers said let’s look at this closely, measure its impact and set up a panel. When the UN conference on finance for development met, it took the whole issue of illicit financial flows as the African panel had recommended. They just integrated it into their action plan. When [US President Barack] Obama speaks at the UN General Assembly, he talks about it. It’s on the global agenda largely because of an African intervention. It is possible, [when it’s] properly organised and thought out, for the Africans to impact on the global thinking in a manner that would benefit the continent. You talk about political action to tackle illicit flows. What, specifically, needs to be done? What is required are very detailed implementation processes. Something like two-thirds of these illicit outflows are because of the activities of the commercial corporations, so you need institutions on the continent that

deal with tax matters, customs and financial intelligence. You can’t avoid building capacity in Africa: I’m talking about institutional capacity. On the matter of the political will [...] when the AU adopted the report and its recommendations, they perpetuated the life of our panel [on illicit flows]. They said we must report annually to the summit about the implementation of those recommendations. I was in Kenya two weeks ago and [...] I said we are going to have to get reports from you, all of the member states, individually. That will help to address the matter about political will. But also we’ve been talking with African civil society. We’ve started reporting back to that civil society, and we’ve done it for East and Southern Africa. Next month, we will do it for North, West and Central Africa. We were in contact while we prepared the report. We will go back to them to say this is now African policy, what do we do? Civil society is very interested in this matter, and the louder its voice in each of our countries the better. You then get pressure from below on the governments to make sure that they do the things that they committed themselves to at the AU. Why did South Africa allow its big companies to move their primary listings to London, sharply cutting their tax obligations?

South Africa’s big multinationals convinced the ANC leadership to allow them to list abroad

SERVICE TO SOUTH AFRICA 18 June 1942 Born in Mbewuleni 1962 Went into exile to help the ANC May 1994 Became deputy president of South Africa 1999 Elected president 2002-3 Chair of the African Union 2007 Lost the race for the ANC presidency to Jacob Zuma 2012 Chosen to lead UNECA’s High Level Panel on Illicit Financial Flows

THE AFRICA REPORT

The problem that was raised by these companies was that they are going towards the mergers and acquisitions in the evolution of the global economy. For example, South African Breweries were saying this is what is happening in the brewing industry globally. The bigger brewers take over the smaller ones. And if we don’t want to lose South African Breweries altogether, then it had better grow and become too big to swallow. They said that if they can’t do it on the basis of capital available in the South African financial sector so they would have to list in London. If they don’t do that, South African Breweries will be bought out by a larger brewer. And then the decision as to the future of South African Breweries lies somewhere else: for example, about the domestic production facility – they may decide to close the South African facility and we will export beer from somewhere to South Africa. This was the argument used. Now,withSABMiller,AnheuserBusch is threatening to take them over. There have been some statements in South Africa to say if SABMiller does get taken over, it must remain listed on the Johannesburg Stock Exchange. South Africa can’t survive autarky and cut itself off from the rest of the world. South Africa has to be open to the rest of the world. We’ve got to sell our gold and platinum somewhere. ● Interview by Patrick Smith

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POLITICS

publishers, Onuzo published her first novel when she was 17. Another two are in the pipeline. Analysing her country’s febrile politics, Onuzo said the previous government’s decision to abandon the teaching of history in schools spoke volumes about an official indifference both to the complexities of the past and the opportunities of the future. Hopes for the coming years are premised on modernisation and technology, but above all on culture and community engagement – a coming together of society. Leaving nothing to chance, Onuzo later explained that she would get stuck into politics in Nigeria after getting a few novels under her belt. FALSE STARTS

The country is still healing from its civil war, 45 years on

NIGERIA

After the first century, all eyes on the next A new book by journalist Richard Bourne has spurred debate about Nigeria’s past and what the future could hold for the country’s exploding population

he first hundred years of Nigeria’s formal existence prompted only themostmodestcommemoration in 2014. With the upcoming national elections, Nigerians had more important matters on their minds. Most of the country also shares a deep ambivalence about the circumstances of Nigeria’s invention under the auspices of Frederick Lugard, appointed by the British colonial authorities to run this expansive new territory in 1914. Nigeria’s creation was a colonial map-drawing exercise whose arbitrariness rivals that of that AngloFrench diplomatic couple Mark Sykes and François Georges-Picot, who divided up the spoils of the Ottoman Empire two years later in the Middle East. Nationalist leader Obafemi Awolowo dismissively commented half a century later that Nigeria was a “geographical expression” rather than a country.

With its well-travelled and youthful population, Nigeria is acutely aware of the weight of culture on its history. There is more harmony than cacophony in this amalgam of more than 300 different languages and ethnicities. It is the richness of that culture that stretches back at least to the Nok civilisation of 1,000BC – which produced those monumental life-sized terracottafigurines–throughtotheBenin bronzes of the 13th century, to the exuberance of the contemporary art, film, music and literary scenes. So when veteran journalist Richard Bourne launched his comprehensive tome Nigeria: A New History of a Turbulent Century in mid-October with a seminar in the august surroundings of Senate House, University of London, he invited Chibundu Onuzo to the discussion panel. The youngest female ever signed to Faber and Faber, T. S. Eliot’s old

ROMANO CAGNONI/GETTY IMAGES

It may be that the election of President Muhammadu Buhari, perhaps the last of the independence generation of leaders, will mark a turning point for the country a century after its foundation. For Onuzo and her peers, the size and diversity of Nigeria should be a strength; its tortuous history should be a salutary warning more than a brake on progress. Has Awolowo’s “geographical expression” become a country? The evidence says it has, albeit uneasily. Bourne cites three points when Nigeria was poised to split at the seams: the civil war between the federal side and the Biafran secessionists from 1967 to 1970; the annulling of Moshood Abiola’s election victory on 12 June 1993; and the tumultuous reign of military ruler General Sani Abacha from 1993 to 1998. Yet, more than the history, it is now arithmetic that concentrates minds. Some 13,000 people – a medium-sized village – are born in Nigeria every day, according to the United Nations. There will be 2.5 billion Africans by 2050, UN demographers estimate, of which some 400 million will be Nigerians, making it the third-most populous country in the world after China and India. For the pessimists, the trajectory looks perilous. Nigeria could host the world’s fastest-growing cities and its highest concentration of jobless young people. Many could be prey to the sectional machinations of devious politicians. The alternative is economic modernisation, the facing down of vested interests that have hobbled the country for decades and the freeing of the country’s entrepreneurial and creative abilities. Aftera generationof false starts, Nigeria could now be edging down that road. ● Patrick Smith

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POLITICS

OPINION

O Olusegun Obasanjo Fo ormer president of Nigeria and member of the Africa Progress Panel

Africa’s future depends on a tough new global climate treaty

DE BE ZE

f the world fails to make December’s climate and emerging markets. Indeed, some countries in the treaty stick, then a global climate catastrophe is region are already at the front of the global trend of climate-resilient, low-carbon development, including certain. In Africa, we’re well aware of that stark Ethiopia, Ghana, Kenya, Nigeria and South Africa. fact: we’re already facing the harshest effects of African countries need to expand our power genclimate change. eration hugely to achieve universal access to modI have been a farmer in Nigeria for 35 years. Like ern energy – and we can do it without locking in tens of millions of farmers across our continent, I high-carbon fuels. We can leapfrog straight have seen first-hand how hard it is to succeed in to renewable energy sources, just as we agriculture in Africa. The climate is volatile and leapfroggedtomobilephones,bypassing difficult, the soil often weak. Electricity supplies fixed lines. A strong African voice proare unreliable and intermittent. As president of moting the opportunities for a “triple Nigeria, I was constantly reminded of these probwin” in climate action, energy and lems and sought to tackle them. The Africa Progress Panel, of which I am a member, poverty reduction can up the tempo addresses these questions in its 2015 report, Power, for a scaling up of low-carbon enPeople, Planet: Seizing Africa’s Energy and Climate ergy investment, not just on the Opportunities. The report calls for determined leadcontinent, but globally. ership within Africa to address the climate challenge Unlocking this opportunity – as well as concerted action by the international comwill not be easy. More than 600 munity at the December climate talks and beyond. million people on the continWhat we need to achieve together is to break the ent still do not have access to link between energy and greenhouse gas emissions. modern energy. Sub-Saharan That will take bold political leadership and practical Africa’s electricity consumppolicies. In 2015, several global leaders have raised tion is lower than Spain’s. On the bar and focused on the need for an ambitious outcurrent trends it will take until come in Paris. We need to see more of such inspiring 2080 for every African to have leadership – not just for our own sake, but for future access to electricity. generations and life on the planet. Greater cohesion among Greater cohesion among African countries African countries is essential to is essential to success at the Paris talks success – in terms of the positions in Paris, as well as in how Changing this picture is not just a they negotiate until the very end. A coherent set of huge challenge, though – it’s also a common African demands is critical if the world is huge investment opportunity. Milto reach the level of ambition needed for the global climate talks to end with a viable, effective agreement. lions of energy-poor, disconnected Africans, who earn less than $2.50 a Africa’s leaders must push for “development day, already constitute an energy market worth $10 billion a year. first” while emphasising that it is possible for Africa What would it take to expand power to expand its economies and improve the wellbeing generation and finance energy for all – while of its citizens by choosing a low-carbon path. Africa avoiding the high-carbon path that the rest stands to gain from developing low-carbon energy, and the world stands to gain from Africa avoiding the of the world has followed? The Africa Progress high-carbon pathway followed by today’s rich world Panel estimates that investment of $55bn per year THE AFRICA REPORT

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is needed until 2030 to meet demand and achieve universal access to electricity. African governments could cover a large part of that financing gap themselves, by building credible tax systems and by redirecting the $21bn spent on subsidies for wasteful utilities and kerosene. Additional revenues could be mobilised by stemming the haemorrhage of finance lost through illicit financial transfers, by narrowing opportunities for tax evasion and borrowing cautiously on bond markets. G8 and G20 countries must act on past commitments to strengthen tax-disclosure requirements, prevent the creation of shell companies and counteract money laundering. Aid must play a supportive, catalytic role. Global and African investment institutions already see the growth and revenue prospects of African infrastructure in a world where demand is slowing in

developed countries. Reforming energy utilities is also key. Long-term national interest must override short-term political gain, vested interests, corruption and political patronage. Energy entrepreneurs can join the reformed utilities in investing revenues and energy funds in sustainable power that protects the planet and pays steady dividends.

The countries responsible for the lion’s share of emissions should tax them Better and more accessible energy can also power up Africa’s agriculture. Governments should take advantage of climate adaptation opportunities that integrate social protection with climate-smart strategies to raise agricultural productivity and to develop rural infrastructure, cutting poverty while strengthening international efforts to combat climate change. The countries responsible for the lion’s share of greenhouse gases should place a stringent price on emissions by taxing them, instead of continuing effectively to pay emitters by spending billions on subsidies for fossil-fuel exploration and production. By 2018, developed countries should withdraw all tax concessions, royalty relief and fiscal transfers, and, by 2020, all state aid to fossil-fuel industries. Unlocking Africa’s energy potential and building the foundations for a climateresilient, low-carbon future will require ambitious, efficient and properly financed multilateral cooperation. Yet the current global climate finance architecture fails each of these credibility tests. The pledge by the G7 leaders at the end of their summit this year to make deep cuts in emissions and to phaseoutfossilfuelsbytheendofthe century is commendable. Their commitment to increase investment in the African renewables sector is also a powerful acknowledgement from some of the world’s major emitters of the important role Africa can play in the global low-carbon transition. The only promises that matter at the Paris climate summit are those that are kept. Africa’s leaders must rise to the challenge. They are the voice of their citizens in the climate talks – and that voice must be heard. Business leaders, religious leaders, the heads of social movements and the mayors of the world’s cities must continue to pressure political leaders to reach an ambitious Paris agreement, backed by carbon pricing and taxation. Together we can create an overwhelming force for change to avert climate catastrophe and seize the opportunity to transform our energy systems and our economies. We must us act now and act together. ●

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COUNTRY FOCUS Ethiopia

VINCENT FOURNIER/JA

Highway 1, linking Djibouti port to Addis, will soon be joined by a Chinese-built railway

When giants dance Ethiopia’s in the driving seat, as investors from East and West seize on opportunities in sectors ranging from construction to brewing. Though they are global competitors, China, the US and Europe can complement each other here, say the ingenious functionaries in the state investment commission By Jacey Fortin in Addis Ababa

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hough her farm is small and the rains have been disappointing, farmer Meseret Daba is looking forward to a profitable harvest this year. The 36-year-old mother of five, who lives near the southern town of Assela, says her income has doubled since she devoted most of her land to barley two years ago. “My life has changed,” she said. “My family is comfortable now, and I’m sending my kids to school.” All around Meseret’s farm, international loans and foreign companies have been fuelling development. The ● ● ●

COUNTRY FOCUS | ETHIOPIA

nearby Wonji-Shoa sugar factory, operated by the state-owned Sugar Corporation, was recently expanded with loans from India’s Ex-Im bank. The Chinese company Sinohydro has upgraded the road connecting Assela with the major city of Adama. But it is a Western corporation that has affected Meseret’s life the most. She began growing barley because Diageo plc, a London-based alcoholic beverages company, initiated a programme in 2012 tosourcethecerealfromEthiopiansmallholders. Meseret and about 6,000 other farmers are receiving seeds, fertiliser and other inputs, the costs of which are deducted when they sell their harvests to local cooperatives, with Diageo’s Meta Abo beer brewery as the ultimate buyer. Over the past few years, Western beer companies including Diageo, Heineken and Castel Group have been building or acquiring breweries in Ethiopia. Nevertheless, China, India and Turkey remain Ethiopia’s biggest foreign direct investors by far. China is Ethiopia’s biggest trading partner and has more foreign direct investmentprojectsthananyothercountry. Chinese companies are also completing infrastructure projects, funded by loans from Chinese banks. These projects have brought tens of thousands of Chinese workers to the country – and added $4bn in the past five years alone to Ethiopia’s $19bn in external cumulative debt. When it comes to Ethiopia’s economic relationship with China, these loans “get all the hype,” says state finance minister Abraham Tekeste. “But we also have a good relationship in terms of trade and direct investment. And we would like to see more Chinese investment, particularly in exports and manufacturing.” ●●●

SUDAN

Red Sea

YEMEN

DJIBOUTI

ADDIS ABABA

SOMALIA

Dire Daoua

ETHIOPIA

SOUTH SUDAN

300 km

Gulf of Aden

SOMALIA KENYA

ETHIOPIA IN NUMBERS POPULATION

97 million1

SOURCES: WORLD BANK 20141, AFDB 2013 & 20142, UNCTAD 20143

LIFE EXPECTANCY AT BIRTH

64.22

AID FLOWS

$3.8bn2

FDI, INFLOWS (current US$)

$1.2bn3

GDP (current US$)

$54.8bn1

GDP GROWTH (annual %)

9.9%1

INFLATION, CONSUMER PRICES (annual %)

7.4%1

INTERNET USERS

2.91

MOBILE CELLULAR SUBSCRIPTIONS (per 100 people)

321

GDP BY SECTOR 14 10 6

WESTERN INTEREST 2 -2

Agriculture Industry Services Real GDP growth *estimations -6 2001- 02 03 04 05 06 07 08 09 10 11 12 13 14 2002 03 04 05 06 07 08 09 10 11 12 13 14 15*

GDP GROWTH % 20

GDP target for 2014/15

*estimations

SOURCE: IMF

10 5 0

2010/ 2011

2011/ 2012

2012/ 2013

2013/ 2014

2014/ 2015*

Despite China’s dominance in Ethiopia, various sectors have been attracting Western attention of late. A recent burst of private-equity investments from Europe has targeted industries including horticulture, wine and energy. These investors may lack Chinese companies’ knack for completing infrastructural projects at low cost, but they boast expertise in certain consumer-oriented sectors, and are keen to exploit Ethiopia’s growing market potential. Aklilu Woldemariam, promotion and research director at the Ethiopian Investment Commission, noted that the continent showing the most new interest is not Asia, but Europe. The United States,

Agricultural workers in the southern state of Awasa, where a new industrial park is to be built by Chinese construction firm CCECC

on the other hand, is “definitely” lagging behind.ConsideringEthiopia’sgoodrelationship with the US – a major aid donor and defence partner – Aklilu hopes the world’s largest economy could one day break into the top-10 list of Ethiopia’s foreign direct investors. The US government has been working to promote investment in Africa through its Power Africa initiative, which uses US technical assistance to facilitate energy investments. In Ethiopia, Power Africa has linked up with ReykjavikGeothermal, a US-Icelandic company, to accelerate development of a geothermal energy site near the southern village of Corbetti. The project has faced delays, but during Obama’s visit to Addis Ababa earlier this yearReykjaviksignedapower-purchasing agreement with Ethiopia’s state-owned electricity company. US private investors are also testing the waters. “As a matter of good investment philosophy, if you’re in Africa you have to be seriously considering Ethiopia,” said Elias Schulze, the managing partner and co-founder of The Africa Group, a US advisory and venture capitalist firm. He adds that although Western firms might be put off by Ethiopia’s lack of dynamism – the private sector is still developing, and

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ETHIOPIA | COUNTRY FOCUS

the Addis Ababa-Djibouti railway. “Turkey, India and China are still developing countries, so we are focusing more on infrastructure,” Yang says. “America has advanced technologies. But developing countries are focusing on what they are good at. When we build, we have seen that the returns are very good, so it’s a win-win situation.” BATTLING FOR BUSINESS?

MICHELE BORZONI/PICTURETANK

In Ethiopia, as in Africa as a whole, Eastern and Western investors are often seen as competitors in a zero-sum game. Though the government is careful to say that all investors are welcome, the close political relationship between China and Ethiopia – both de-facto oneparty states that have pursued a heavily state-driven development model – has helped to cement China’s role as a primary economic partner. Speaking at the African Union during his visit to Addis Ababa in July, Obama made subtle jabs at China when he said that “economicrelationships can’t simply be about building countries’ infrastructure with foreign labour.” He added that African leaders might find it easier to work with countries that don’t speak out against human rights abuses. Western The move reflected a growing realisation countries are home to advocacy groups that Ethiopia needed a more proactive like Human Rights Watch and Amnesty approach to attracting foreign investors. International, which criticise Ethiopia The building is a hive of activity. It is for pushing large-scale development meant to be a one-stop shop to help inprojects at the expense of civil liberties. vestors navigate a system where federalBut when it comes to business, Aklilu ised land policies, unreliable utilities and argues that all countries have roles to play. Those roles are often complementopaque bureaucracies might otherwise ary,aswhenEuropeanbeer becomeadeterrent.Butnot companies use Chineseevery sector is equal: manufacturing and agriculture built roads to transport are priorities, while other supplies. Or when farmers like Meseret participate industries, like banking in initiatives like Diageo’s and trade, are not open to barley sourcing, while her foreigners except through community reaps the beEthiopian intermediaries. “Our promotion strategy nefits of the railways and is in line with government energy transmission lines being laid down by Chinese policy,” said Aklilu. Develof Chinese companies. oping countries happen investment has “There can be a sense to specialise in the sectors flowed into Ethiopia Ethiopia prioritises, he adthat it’s us or them, but we since 2010 ded as an explanation for can really have a balance,” SOURCE: CHINESE GOVERNMENT said Schulze. “The Chinese why Western firms have a shouldbehere.TheIndians smaller footprint. This point of view is confirmed by Yang should be here. The Americans should be here. The Germans should be here. And Yang, an assistant business manager at they can all be here for another decade the Ethiopian construction branch of or so without fighting in a really competthe China Civil Engineering Construcitive sense for market share, which is a tion Corporation (CCECC), one of two very unique opportunity.” ● Chinese companies that is laying down

inhibited by protectionist policies – the country’s political stability, economic growth and huge population should be key selling points for investors. Schulze is also a non-executive board member of a family business, Schulze Global Investments, which has been a pioneer of US private equity in frontier markets. The Ethiopian companies in the firm’s portfolio are diverse, covering sectors like coffee, medical supplies, food processing and cement. The Ethiopian government seems responsive to growing Western interest, said Schulze. “There’s obviously a sense of patience you need to have. But the government does reform the investment code and the commercial code with decent regularity, so that’s very helpful.” NEW NAME, NEW ACTION

Atop Aklilu’s office building, which sits at one of the busiest intersections in Addis Ababa, a sign spells out ‘Ethiopian Investment Agency’ in bold red letters. The label is outdated. About a year ago the agency, which used to be under the Ministry of Industry, began reporting straight to Prime Minister Hailemariam Desalegn and was renamed the Ethiopian Investment Commission. THE AFRICA REPORT

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$4bn

COUNTRY FOCUS | ETHIOPIA

PEOPLE TO WATCH

Chess at a leisurely pace All four parties in the ruling coalition had a postelection shuffle in August but their leaders remain intact as Metekakat proves slow-moving

ollowing a sweeping electoral victory for the ruling coalition in May,Ethiopia’snewparliamentwill oversee the country’s second Growth and Transformation Plan (GTP II), a five-year blueprint outlining development goals. Like its predecessor, the GTP II sets out ambitious targets for infrastructure, energy generation and economic growth. But this round will have an even stronger focus on promoting industry, which makes up only 14.3 % of gross domestic product. With opposition parties in disarray following predictable losses in May’s vote, politics in Africa’s second-mostpopulous country are still dominated by the Ethiopian People’s Revolutionary Democratic Front (EPRDF), which is made up of four regional parties. Congresses were held in August to elect the parties’ new executive committees, but all kept their chairmen and deputy chairs. The Oromo Peoples’ Democratic Organisation and the Amhara National Democratic Movement (ANDM) have been accused by some constituents of neglecting regional priorities, an issue the influential former communications minister Bereket Simon raised in a speech before losing his seat on the ANDM’s executive committee. The Southern Ethiopian Peoples’ Democratic Movement, a less cohesive alliance of various ethnic groups, saw its chairman Hailemariam Desalegn con-

tinue as prime minister by a unanimous parliamentary vote. In a blow to Metekakat (a long-term plan to retire veteran politicians in favour of fresh talent) the Tigray People’s Liberation Front (TPLF) awarded several retired veterans two years of renewed influence in the form of party voting rights. They included Sebhat Nega, a founding TPLF member; Arkebe Oqubay (1), a popular former mayor of Addis Ababa who now leads Ethiopia’s industrialisation drive; and Seyoum Mesfin, a former ambassador to China who now leads regional efforts to end the conflict in neighbouring South Sudan (see page 128). TIGRAY SPLIT

back to the TPLF’s revolutionary roots. For the first time, the influential spy chief was elected to the party’s – and therefore the ruling coalition’s – executive committee. His brother Daniel Assefa was appointed mayor of Mekelle. Getachew will, however, face some extra oversight from now on. Intelligence and defence institutions will be held accountable to a new standing committee, which will focus on budgetary and administrative issues. The move suggests that Prime Minister Hailemariam, once seen as a placeholder following the death of his iconic predecessor Meles Zenawi, is making moves to assert his leadership. Though constrained by a balancing act requiring him to keep his cabinet ethnically diverse, the prime minister has made some notable appointments. Abdulaziz Mohammed (2), widely seen as a consensus seeker, replaced the veteran Sufian Ahmed as finance minister. Kebede Chane, who as trade minister failed to meet export targets, lost his position to his deputy Yacob Yala. Newly elected Tigray MP Getachew Reda (3) has taken over Redwan Hussien’s position as communications affairs minister. But despite a few cabinet and party congress shake-ups, there is no sign that

Though Abay Woldu retained his seat as TPLF party chairman, his poor showing in preliminary votes was a clear sign of his waning popularity. The TPLF is now dealing with a split between two groups, with Despite a few cabinet shakeAbay and his allies based in ups, there is no sign the EPRDF Mekelle, Tigray’s capital city, is looking to change direction complaining about the national focus of Addis-based party members like Arkebe, Sebhat and the EPRDF is looking to change ideoloDebretsionGebremichael,whoremains gical direction. Ethiopia has made great as TPLF deputy chair, one of three deputy strides in reducing poverty and claimed prime ministers and minister of commu10.2% economic growth in the last fiscal nication and information technology. year, a strong performance even if the Security service head Getachew AsInternational Monetary Fund privately sefa, a man rarely seen by party outsiders, believes it is several percentage points made an impassioned speech harking lower. ● Jacey Fortin in Addis Ababa THE AFRICA REPORT

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COUNTRY FOCUS | ETHIOPIA

INTERVIEW So far, so clear. But half an hour before the debate, Tedros was sitting across the table from philanthropist Mo Ibrahim, who was leadingtheopposingteam,arguing that democracy had to take priority over development. Far from making their respective cases, they seemed in resolute agreement on the issue. “There is a problem with your debate,” smiled Ibrahim. ALPHA AND OMEGA AUSTIN THOMASON/UNIVERSITY OF MICHIGAN

Tedros Adhanom Foreign affairs minister, Ethiopia

We’re growing fast, but it’s not enough After a hectic three months dealing with conflicts and negotiating with investors across Africa, Asia and Europe, Tedros Adhanom explains his country’s diplomatic strategy

t was a diplomatic conundrum that needed urgent resolution. Tedros Adhanom, Ethiopia’s indefatigable foreign minister, had arrived in Accra for the launching of The Africa Report Debates, organised in conjunction with the Mo Ibrahim Foundation on 20 November. Given Ethiopia’s impressive economic growth over the past two decades, Tedros had been asked to lead the debating team in favour of the motion that “development should take priority over democracy” (see page 78).

After all, since the ruling Ethiopian People’s Revolutionary Democratic Front (EPRDF) came to power in 1991, many of its national policies have been framed aroundthedefeatofpoverty.When theEPRDF’sfoundingleaderMeles Zenawi – who died in 2012 – was asked about his government’s goals, he shot back that he would consider its policies a success when Ethiopians were able to eat three meals a day. In the 2015 elections, the ruling party won every seat in parliament. THE AFRICA REPORT

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Tedros was adamant that there was no conflict between political and economic goods in Ethiopia. “For us, the twin goals of democracy and development are the alpha and omega of our country’s survival,” he insisted, quoting Ethiopia’sforeignpolicystatement. That argument, of course, would be strongly disputed by the myriad opposition groups in Ethiopia, let alone international lobby groups such as Amnesty International and Human Rights Watch. However, in a few short minutes of negotiation, a compromise motion was concocted in line with Tedros’s position and it won widespread support in the hall in Accra. These days, Tedros is used to winning arguments, reeling off statistics about Ethiopia’s economic record to applause from foreign development experts. “Of course we’re growing fast, but it still is not enough to bring structural change. And we’re working hard on that, on really attracting investment, especially in manufacturing,” he told The Africa Report after the debate. The government has reduced poverty by a third and increased primary school enrolment to cover 95% of the population, a fourfold increase since 1991. And that is the answer from Addis Ababa to those who criticise the country’s democratic deficit. Since the low point of the 2005 elections, when the government imposed tough restrictions on civil society and the press, the balance of the argument has shifted towards Ethiopia’s development record and away from concerns about political pluralism. ● ● ●

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That awkward trade-off between praising Ethiopia’s progress on development and raising concerns about human rights, treatment of opposition politicians and freedom of the press was evident in the remarks from US president Barack Obama and other officials in 2015. But from the scores of finance and foreign ministers at the UN Development Summit in July, there was general applause for Addis Ababa’s economic record and precious little criticism of the political issues. Some of this is self-serving. Security is the other part of the argument: Western and African governments alike are happy for Ethiopia to take a robust lead on regional security. Ethiopia is now part of the African Union’s force in Somalia and has been working closely with President Hassan Sheikh Mohamud’s government. The main track in Somalia should be political, Tedros added: “The regional leaders and the federal government [of Somalia] now have a platform to coordinate their efforts [...]. They are sitting to address the differences they have. That political process can help isolate Al-Shabaab, weaken it.” ●●●

NO COUNTRY IS IMMUNE

When asked why he thought Ethiopia’s security apparatus was more able than Kenya’s to fend off terrorist attacks from Al-Shabaab, Tedros diplomatically explained their differing histories: “No country is immune […]. We suffered our own attacks before, some 10 or more years ago. We tried to learn from that experience, to

overhaul our security system and make it more community-based. Starting from the border to the centre, when people see some suspicious activity they inform our security apparatus.” Eritrea, which went to war with Ethiopia between 1998-2000, is the other big regional security problem for Addis. Political dissidents and those fleeing military service have joined a flood of migrants from the neighbouring country. “The migration issue is very serious,” says Tedros. “We have four camps in Ethiopia where we host close to 200,000 Eritrean refugees, and the saddest part is we have 3,000 unaccompanied children. Youhaveseenthereportpresented to the UN Human Rights Council […] the crimes they [the Eritrean government] are committing are really serious.” At the same time, Tedros opposes plans by some countries in the European Union for a €200m ($212m) aid package for Eritrea to reduce migration: “It’s only addressing the symptoms. They haven’t even included conditions to stop the brutal behaviour internally and externally. By focusing on migration, the EU is only addressing its own problem – not Eritrea’s problem, not the neighbourhood’s problems – so they will only get the same destabilising behaviour.” Yet for Ethiopia’s other neighbour, Djibouti, where a few countries have established military bases, Tedros seems confident that neither the build-up of international forces nor 2016’s national elections will provoke a crisis.

The US president, here with the Ethiopian prime minister, has highlighted the country’s democratic shortcomings

Indeed, the Djibouti-Ethiopia relationship is at its strongest, he adds: “We’re very close. We understand each other […]. We agreed to have full economic integration and we believe that will lead to political integration in the future. If you consider the hardware, we have really done a lot.” The two countries are now joined via a new road and railway network, an electric power interconnection and now a regional water supply project. CHINESE SCHEMES

Beyond the region, Ethiopia has beenconsolidatingtieswithChina, despite Beijing’s economic rebalancing and slowdown: “I actually expect more investment from China,” Tedros explained. “We were there in September with our prime minister [Hailemariam Desalegn] and we met the central government and had the chance to go around three provinces.” The two sides discussed several new schemes to build manufacturing plants, big infrastructure projects and large agricultural and food-processing operations. “As you know, in China wages are increasing and there are lots of companies ready to migrate […]. They’re looking for a combination of incentives that can help them and also sustainable growth when they go somewhere in Africa.” With China’s rate of investment in Africa down 40% in the first half in 2015 and its national income growing more slowly than forecast, Tedros’s optimism about Beijing’s appetite fortradeandinvestmentwillbeput to a severe test in the next year. ●

A MINISTERIAL CAREER 1965 Born in Asmara 1986 Began working for the health ministry 2005 Became Ethiopia’s health minister 2011 Won the Jimmy and Rosalynn Carter Humanitarian Award for his research of malaria November 2012 Named minister of foreign affairs

THE AFRICA REPORT

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PHARMACEUTICALS

Pills for the populace The medical manufacturing industry, which still only accounts for about 15% of the local market, is the focus of a government drive for investment

he manufacturing sector in Appliance Technology Company and Ethiopia is still in its infancy, and Servipharma met with Arkebe Equbay, the drug industry is no exception. special adviser to Prime Minister HaileThings are moving fast, with state supmariam Desalegn, to discuss joint ventures for manufacturing essential drugs. port and a vibrant local market. The Chinese are not the only ones eyeing “There is a significant change in the the Ethiopian pharmaceutical pharmaceutical industry’s landscape between now and five years market. Indian, Emirati and ago. The government has now European investors are also given huge attention to the sector,” either about to start producMohammed Nuri, the founder tion or are planning to invest and chief executive of Medtech in Ethiopia. The Ethiopian Ethiopia and board chairman of pharmaceutical the former state-owned Ethiopian PLAN OF ACTION market Pharmaceuticals Manufacturing is worth In July 2015, Ethiopia Factory (Epharm), tells The Africa an estimated launched a 10-year national Report. “But still, the country’s plan of action to develop pharmaceuticalcompaniesbarely local pharmaceutical manper year cover 15% of local demand.” ufacturing capacity. The plan, The government says the phar- SOURCE: DEPARTMENT supported by the European maceutical market in Ethiopia is OF TRADE AND INDUSTRY Union Commission and worth $400m-$500m each year, the Bill and Melinda Gates with growth of 25% per annum. Steady Foundation along with the World Health economic growth, improvement in the Organisation (WHO), aims to increase delivery of health care and the introaccess to essential medicines. duction of social health insurance covAccording to the national plan, the erage across the country is helping to development of the Ethiopian pharmaraise drug consumption. ceuticals manufacturing sector is still Ethiopia now provides major incentives for local and foreign companies that plan to enter the pharmaceutical industry. The benefits range from giving precedence to local companies in government procurement to offering an advance payment for up to 30% of the value of the orders. Pharmaceutical companies based in Ethiopia also enjoy tax-free loans for up to 70% of new investments and a 100% customs duty exemption on imports of all capital goods. In October, UNAIDS China and the Chinese Chamber of Commerce organised for six major Chinese pharmaceutical and medical supplies companies to visit Addis Ababa. Representatives of Mindray Medical International, Zhejiang Kangle Pharmaceutical, Desano Pharma, China Regenerative Medicine International, Wuhu Snnda Medical Treatment

$400m

Pharmaceutical manufacturing in Ethiopia has the potential to provide hundreds more with jobs

limited in terms of production capacity, technology acquisition and the creation of employment. The plan states that most of the local manufacturers are not compliant with international good manufacturing practice and no single product has been prequalified by the WHO. “We understand and are committed to the envisaged development of the sector in the next 10 years,” Kesetebirhan Admasu, Ethiopia’s health minister, said at the plan’s launch. Currently, there are 12 pharmaceutical companies operating in the country, and only six of them at full capacity. Cadila, Julphar Ethiopia, the Ethiopian Pharmaceutical Manufacturing Company and Pharmacure are some of the major players. There are also approximately 200 importers of pharmaceutical products and medical consumables in Ethiopia. Medtech’s Mohammed explains: “Ethiopia’s pharmaceutical industry is attractive compared to [those of] other African countries owing to the large population size here and a growing middleclass population.” He adds that one of his other companies, Julphar Ethiopia, is already exporting its products to Somaliland and South Sudan. He explains that theindustry will continue to growbut that the government could do more by adjusting its foreign-exchange controls to the needs of companies: “The big challenge we are facing at the moment is lack of access to sufficient foreign exchange.” ● Elias Meseret Taye in Addis Ababa

XINHUA/ZUMA/REA

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At the crossroads of Africa, the Arab world and Asia

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COUNTRY FOCUS | ETHIOPIA

OPINION

M Mima Nedelcovych Presiident & CEO of the Initiative for Global Development

All aboard the sole train: how the US and China are empowering Ethiopia’s private sector

thiopia’s footwear industry has long been known for producing fine-quality leather shoes and products. With reliable power sources, affordable labour and a fast-growing economy with a forecasted GDP growth of over 10%, it is no wonder that international companies and suppliers are flocking to Ethiopia to tap into this market. Through the African Growth and Opportunity Act (AGOA), the US-Africa trade law that provides eligible African countries with duty-free and quota-free access into the US market, leather shoes exported from Ethiopia have simply exploded. Under AGOA, shoe exports jumped from $630,000 to nearly $7m between 2011 and 2012, a more than tenfold increase, according to statistics from USAID. Ethiopia has the largest livestock herd in Africa and, indeed, one of the largest in the world. Local companies have been producing raw materials and leather products for export, dating as far back as the 1930s. A new class of Ethiopian entrepreneurs are taking advantage of AGOA to operate in a world-class space. SoleRebels, an Ethiopian eco-friendly footwear manufacturer, has transformed itself from a small enterprise into a global footwear company with projected yearly sales of $15m or more in revenue. But for the most part Ethiopia’s homegrown businesses do not yet have the scalable manufacturing capacity to supply a US market. So, who’s taking advantage of AGOA’s duty-free access to the US market? Interestingly, it’s Chinese investors (see TAR 58, March 2014). Chinese companies are stepping in to fill the void in Ethiopia’s manufacturing sector. The Huajian Group, a Chinese footwear manufacturer that opened up a factory outside the capital, Addis Ababa, is a perfect example of Chinese investors taking advantage of AGOA. Huajian has committed to investing $2m over a 10-year period to build ‘Shoe City’, a global shoe-manufacturing hub in the country. Chinese private-sector investments are providing a boost to the economy by creating jobs, building local capacity, and increasing funding for public ser-

vices. Truth be told, it’s helping pull many out of poverty in an environment of a bulging young population in search of employment. With more Chinese private companies reaping the benefits of AGOA, some question whether the US is losing out. Not necessarily. It is up to US companies to choose what part of the value chain they wish to focus on. If they are focusing on the downstream role of buyers, branders and sellers of the shoes into the US market, so be it. By providing the necessary infrastructure and reliable power, Ethiopia is enabling the Chinese to move some of their manufacturing offshore from China to lesser-cost production sites. In the end, Ethiopia is the ultimate winner. And AGOA has accomplished its mission of stimulating growth of the African private sector by opening US markets to African-made products. US companies stand to benefit from lucrative new business opportunities to either invest in and scale up Ethiopian companies, or enable that to happen by providing profitable access to the US market for quality and competitively priced products. Years ago, US business had little choice but to deal primarily with government officials. The African private sector was primarily structured for commerce and had very little capacity for manufacturing and industry.USbusinessestodaycanfind solid partners in Ethiopian small and medium-sized businesses, and certainly can find common ground with their Chinese counterparts in Ethiopia. Chinese manufacturing companies produce leather goods at lower costs; US companies and markets have access to low-cost, high-quality goods; and Ethiopians gain new jobs and experience a boost in their economy. Ethiopian companies will also benefit from a transfer of knowledge and technical expertise to prime their business for the international market. A win-win for everyone. ● THE AFRICA REPORT

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BUSINESS ELECTRICITY

Who’s got

watts? There are big pushes for Africa to be electrified, but the continent is far from plugged in. Projects have been slow to develop even as new money has been looking for ventures By Jon Marks

nveryfewsubjectsis consensus so global and the problem so stark as the need for sub-Saharan Africa (SSA) – the world’s least-electrified region along with rural India – to gain access to clean, sustainable energy. Whether by developing fitfor-purpose electricity supply industries (ESIs) or off-grid solutions that bypass problems that have left much of SSA in the dark, improved access is essential for economic growth and development. The World Bank estimates that 24% of SSA’s population now has access to electricity. Electricity THE AFRICA REPORT

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shortages are blighting economic growth from Accra to the Cape. Dependence on diesel generators is hugely costly and polluting, and the lack of clean energy is deadly – according to the World Health Organisation, nearly 4 million people die each year from inhaling lethal smoke from kitchen stoves and fires. Acronyms have piled up as the ‘international community’ responds. The United Nations launched its global Sustainable Energy for All (SE4All) initiative in 2012 to pull one billion people out of energy poverty, 500 million of theminAfrica.KandehYumkella,a N ° 76

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Political and bureaucratic blockages are weighing on big-ticket power projects

PETTERIK WIGGERS/PANOS-REA

distinguished and inspiring Sierra Leonean, is its first chief executive. US president Barack Obama in 2013 moved to burnish his legacy by unveiling Power Africa, committed to “adding 60m new electricity connections and generating 30,000MW of new and cleaner power” in a programme driven by US federal agencies and private sector partners. Following in the slipstream, but with a Gallic flavour, French politician and former environment minister Jean-Louis Borloowonheadlinesbyestablishing Energies pour l’Afrique this year. Many of these programmes, which also include the AfricaTHE AFRICA REPORT

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24% of subSaharan Africa’s population now has access to electricity, the World Bank says

European Union Energy Partnership, have placed the promotion of renewable energy (RE) at the top of their agenda. Unprecedented commitments to RE and energy efficiency – which is still largely ignored by many African ESIs – are expected to emerge out of the global climate talks in Paris in December 2015. There are signs of progress in lighting up SSA. Nigeria privatised its inefficient generation and distribution in a new system in 2013 back-stopped by the World Bank and driven by some of the nation’s leading reformists. Some of the successor compan-

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ies are showing signs of life, although triumphant declarations that the Nigerian ESI has definitively entered a new phase seem wildly overstated. WHETTED APPETITES

A long-awaited ruling by the new federal attorney-general allowing the Azura independent power project (IPP) to reach financial close failed to make many headlines outside the industry, but potential developers welcomed it as a breakthrough for privately financed development in Nigeria (see box). Their appetites have been whetted by the potential for

BUSINESS | COMPANIES & MARKETS

investing in Nigeria and in the DepartmentofEnergy’sindependbankable projects emerging from ent power project office – to work South Africa’s Renewable Energy with international developers to Independent Power Producer Promake commitments to RE a realcurement (REIPPP) programme. ity through the REIPPP structure. But in many countries, finanThere is a genuine buzz among cing flows and project delivery private-equity players. Some inremain spotty at best. Across SSA, vestors have donor government public sector utilities, mandated shareholders, like Britain-based Actis and CDC Group. Others – like by governments to charge tarUS giants Blackstone and Carlyle iffs that are below their breakGroup, and powerful players such even points for their electricity, as South Africa-based Harith – are all but insolvent. Electricity have put in place funds and are is seen by populations as a publooking for projects to invest in. lic good that should not be paid Backed by bilateral and interfor at commercial rates, even if a lack of cost-reflective tariffs means national financial institutions, Paris-based Meridiam Infrastrucbankrupt utilities fail to deliver ture Finance is launching its first sufficient supply. African equity fund, which partner The second SE4All forum, in Julia Prescot says will position it as May, heard that even with the rea developer as well as an investor cent upsurge in efforts to improve in long-term projects in SSA. supply, rapid global population There is much excitement growth threatens to outstrip inabout new classes of investor creases in energy access, putting that could make a major impact the 2030 target in jeopardy. Anyby funding projects. These inthing between $1trn and $2trn is needed annually to achieve global clude pension funds, sovereign wealth funds and the family offices that are a Between $1trn and $2trn feature of contemporary fundraising. South would be needed annually African pension funds to supply affordable and and respected bodies reliable energy to all elsewhere like the Botswana Public Officers goals, World Bank global practice Pension Fund have billions of onenergyandextractiveindustries dollars that could go into power senior director Anita Marangoly and other infrastructure – if, as George told the New York gathmany expect will happen in the ering. The need had previously next decade, energy projects bebeen estimated at $400bn per year. come a recognised asset class. The overall trend of commitRENEWABLES SUCCESS ments to energy is increasing, The continued success of the but not as quickly as the hype REIPPP in delivering solar and generated by Obama’s Power wind generation projects at lower Africa and other initiatives would and lower prices suggests largesuggest. The Infrastructure Consortium for Africa (ICA), whose scale investment can be mobilmembers include leading naised if the conditions are right. tional and multilateral donors, South Africa’s giant state utilreports that energy again received ity, Eskom, remains in crisis over the greatest attention of the four its failure to deliver coal-fired infrastructure sectors it promotes power stations and upgraded in 2014, with its members’ comtransmission projects on time, and is mired in governance probmitments at $9.2bn. lems. But South Africa has made Multilateral development banks led the way, with the World Bank a success of renewables since Group committing $2.3bn to enthe government finally allowed ergy projects, led by the Noor enlightened managers – notably redoubtableTreasuryofficialKaren Ouarzazate concentrated solar Breytenbach, who now heads the power project in Morocco. ● ● ●

ELECTRICITY Morocco Kingdom in the sun Plans to install at least 2GW of solar and 2GW of wind by 2020 have made considerable progress in a policy driven from the top and supported by a growing commercial base. Work is under way by Saudi Arabian developer Acwa Power and Spain’s Sener Grupo de Ingeniería on three of the four phases of Africa’s single largest solar project, Moroccan Agency for Solar Energy’s (MASEN) plan to generate 510MW at Ouarzazate. Meanwhile, local companies including Lafarge Maroc and Italcementi’s local affiliate Ciments du Maroc are installing wind power. These moves will overhaul the oil-import-dependent kingdom’s energy mix: total installed generation capacity stands at 7.9GW, of which 68% is thermal – nearly half of it from coal.

Nigeria IPP promise, generation shortfalls After months of politicking, a long-awaited ruling by the new federal attorney general should allow the Azura-Edo independent power project (IPP) to finally reach financial close; this will be seen as a breakthrough for privately financed development in Nigeria, providing a template for future projects. The 1,074MW Alaoji, 561MW Calabar and 750MW Olorunsogo II National Integrated Power Projects were commissioned in early 2015, when installed on-grid capacity rose to around 12.8GW. However, actual generation performance remains poor, with output fluctuating between 1.3GW in May and 4.7GW in August. Vice-president Yemi Osinbajo hopes to increase this to 6GW in the first quarter of 2016. Key reforms have suffered chronic delay, including the declaration of the Transitional Electricity Market – hampering efforts to overhaul privately owned distribution companies.

South Africa Renewables benchmark After years of being a laggard in promoting renewables programmes, South Africa has set a benchmark with its Renewable Energy Independent Power Producer Procurement (REIPPP) programme to develop solar and wind projects to feed the national grid since 2011. The prices of renewables projects have plunged to levels that are now competitive with thermal power – which in South Africa means cheap coal. The result is a major upturn in capacity in a thermal power-dominated grid that has been suffering near-daily blackouts. As of mid-2015, total generation capacity allocated through REIPPP since 2011 had reached 6.33GW, involving an investment of around R193bn ($15.5bn). While a financial crisis at national utility Eskom delayed a fourth round of REIPPP bidding in 2014 – as much else – this is going ahead, with the government adding another 2.8GW of capacity for developers to bid for.

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COMPANIES & MARKETS | BUSINESS

To Spain

TUNISIA

Algiers

To Italy

Tunis Gulf of Gabès

Rabat Hassi R’Mel

MOROCCO Sidi Mokhtar

Berkine Basin

Ouarzazate

Western Desert

Gas pipeline Major power generation projects:

Sirte Basin LIBYA

• Hydroelectric (including pumped storage)

EGYPT

L. Nasser

Commissioned Pipeline

Nile

MALI

• Thermal (oil, gas, coal)

MAURITANIA NIGER

Niger

Dakar

SENEGAL GAMBIA Bamako Bissau GUINEA B.

Ouagadougou

Banjul

Niamey

BURKINA FASO

GUINEA

BENIN TOGO GHANA

CÔTE Freetown D’IVOIRE SIERRA LEONE Monrovia Yamoussoukro Lomé LIBERIA Foxtrot

Ten Jubilee

Ethiopia Giant in the Horn

Porto Novo

Blue Nile

L. Chad

Niger Delta EQUAT. GUINEA Libreville

SOUTH SUDAN

CENTRAL AFRICAN REPUBLIC Bangui

CAMEROON Yaoundé

•

Addis Ababa

White Nile

SOMALIA

ETHIOPIA

Uele

UGANDA Kampala

Juba

Kigali Lake DEMOCRATIC Victoria REPUBLIC OF CONGO RWANDA Bujumbura BURUNDI Kinshasa

Dodoma

TANZANIA

Kasaï

Luanda

Tana

Nairobi

Lake Tanganyika

Lualaba

Lake Mweru

Songo Songo Offshore Tanzania Mnazy Bay

Lake Malawi

ANGOLA Cunene

Mogadishu

KENYA

CONGO

Lower Congo Basin

N ° 76

ERITREA

Juba

Congo

GABON

• Other (solar, wind, geothermal, nuclear)

Djibouti

Abuja

Brazzaville

•

Asmara

N’Djamena

NIGERIA

Offshore Cabinda

Ethiopia has bucked the trend of stalled megaprojects (see main article), developing hydroelectric power (HEP) dams even though it was deprived of major loans from the World Bank and other conventional donors in the last decade as many funders pulled back, influenced by non-governmental organisations and other critics. China, financing work by Chinese companies, made up some of that shortfall. But for many big projects, led by the 6GW Grand Ethiopian Renaissance Dam (GERD), a government dedicated to promoting the ‘developmental state’ has mobilised its own funds, some coming after appeals to the diaspora. Renewables output has risen from 360MW to 4.2GW in the past 20 years and will reach 12GW as GERD and other projects come on stream in the next few years from HEP, solar, wind and geothermal sources. HEP and electricity interconnections play a critical role in Ethiopia’s efforts to pull its population out of poverty and in promoting regional relations, says Tedros Adhanom Ghebreyesus, foreign affairs minister. Ethiopia is already supplying electricity to Djibouti and Sudan, and “will supply 2GW to Kenya after GERD is complete”, which Tedros says “will contribute to integrating Africa”. THE AFRICA REPORT

SUDAN

CHAD

Khartoum

SOURCE: CBI/AEEP

Conakry

To Jordan

Cairo

ALGERIA

Nouakchott

Major gas fields and recent significant discoveries

To Israel

Ghadames Basin

Illizi Basin

Sahara Fields

Offshore Nile Delta

Tripoli

ZAMBIA

Lilongwe Lusaka

Cubango

Offshore Rovuma MOZAMBIQUE Basin MADAGASCAR

Harare

Antananarivo

ZIMBABWE

NAMIBIA BOTSWANA

Windhoek

Limpopo

PandeTemane

Gaborone

Kudu

Orange

Vaal

Maputo Pretoria SWAZILAND Mbabane

Maseru

Ibhubesi

LESOTHO SOUTH AFRICA

Kenya Tapping the Rift Valley

Bredasdorp Basin

The East African Rift Valley has undoubted potential to develop gigawatts of geothermal resources. A major problem has been early-stage exploration for steam, the cost of which many power developers are loath to take on. The Kenyan government created the Geothermal Development Company (GDC) to help tackle these problems; it has several projects under way, following on from the 280MW expansion of the Olkaria development – where, separately, international investor Ormat has developed several projects. GDC’s larger project is the 400MW Menengai Geothermal Development Phase 1 Project in Nakuru, where initial support for exploratory drilling and testing came from the African Development Bank. A respected and important source of financial support driving schemes across the region has been the Geothermal Risk Mitigation Facility, developed by the African Union Commission and funder KfW Entwicklungsbank, a German development bank. Kenya hopes to boost capacity to 1,600MW on the Menengai site. However, GDC has, in recent months, become mired over claims of corruption linked to procurement, with projects delayed by judicial review.

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BUSINESS | COMPANIES & MARKETS

Another notable 2014 commitment was the African Development Bank’s $1bn allocation to Angola’s power sector reform support programme. Power Africa committed to put $7bn into the sector in 2013. But the programme appears to have less potential because the US government explained that it would play a role in mobilising funds and would not be providing huge sums of its own. Meanwhile, the ICA Secretariat and other observers have noted a withdrawal of Chinese funding from projects, reflecting Beijing’s concern to regear its spending to meet a harsher economic climate. A critical problem raised by many developers, lawyers and other specialists is the problem of working with weak SSA government departments and utilities. The Abidjan-based ICA Secretariat’s annual poll of private sector operators in African infrastructure sees them citing “constraints such as bureaucratic delays, policy uncertainty, lack of transparency and insufficient institutional capacity”. But private sector respondents and ICA members were preoccupied with “the shortage of adequately prepared or bankable projects [which] was a much bigger challenge than finding project finance”. ●●●

MEGA-SCHEMES STALLED

Political, bureaucratic and other blockages have taken an especially heavy toll on the big-ticket projects promoted by pan-African initiatives that remain central to leaders’ political discourse, whose flagships are the New Partnership for Africa’s Development and the Programme for Infrastructure Development in Africa (PIDA). While swathes of press releases and news coverage focus on PIDA’s “transformational” list of major infrastructure projects, few of these schemes have made significant progress over the past year. “The political discourse that Africa’s generation deficits can be met by projects like Inga – and that other more mundane issues do not require such effort – has been

KEVIN MOLONEY/THE NEW YORK TIMES-REDUX-REA

deeply damaging,” comments a leading project developer. He is referring to the potentially huge Inga hydroelectric power (HEP) dam in the Democratic Republic of Congo. In its latest iteration, the minimum 3.5GW Inga III scheme was expected to be developed with Eskom as an anchor customer. But that seems unlikely, with South Africa once again pulling back from a major commitment. One emerging player has bucked the trend of stalled mega-projects: Ethiopia has developed a number of major dams without recourse to loans from the World Bank and other traditional donors (see box). While PIDA’s mega-schemes drag on elsewhere, the real breakthrough may come at the other end of the scale, where communities, local authorities, nongovernmental organisations and other stakeholders are exploring off-grid options that can serve isolated communities and bypass often poorly performing state utilities. SE4All is among those won over by mini-grids, providing the zippy slogan of “converting commitments to kilowatt hours”. Grassroots businesses are developing new services that could emerge as the elusive ‘game-changers’ SSA craves – just as information and communications technology (ICT)

Decentralised solar power and other off-grid options can provide electricity with less government interference

2080 On current trends it will take 65 years until all of Africa has electricity SOURCE: APP

THE AFRICA REPORT

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entrepreneurs, not old-style state monopolies, drove the mobile telecoms revolution. Pay-as-you-go distributor M-Kopa Solar is supplying more than 250,000 homes in Kenya, Uganda and Tanzania using consumer-friendly sales plans linked to payments via mobile phones. M-Kopaanditsgrowingnumberof peers argue that harnessing new, ever-cheaper technologies makes market-based solutions relevant to even the poorest communities. Professor Izael Da Silva of Nairobi-based Strathmore University, one of the continent’s deeper thinkers on ESI issues, observes that decentralised generatordistributors can provide electricity to rural consumers at commercial rates as they leverage technology and lessons gained from ICT. In the process, they are effectively relegating government to the role of regulator, as business is freed from the constraints of traditional state monopolies. Taking heart from the ICT experience – more private investment and less government interference, not to be confused with reduced standards of governance – should give hope that electricity is coming to the estimated 585 million SSA citizens who lack access, even if it is not necessarily transmitted from a glitzy mega-project opened by a smiling big man. ● N ° 76

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Last of the big spenders: say goodbye to the middle-class myth

CONSUMERS

Cameroon – and eschewing the ‘floating’ segment defined by the AfDB, research outfit BearingPoint and pollsters Ipsos restricted themselves to households with revenue between $15 and $60 a day or $450 to $1,800 per month. Extrapolated, that would give a middle class of around 140 million people, corresponding roughly to the superior and inferior tranches identified by the AfDB. Researchers conducted 4,000 interviews, taking between 30 minutes and an hour on each of them, with questions touching economic data, social issues and consumption habits. The study included a further 50 in-depth half-day studies.

More bills than thrills A new study by Africa-focused distribution company CFAO argues that Africa’s middle classes are smaller, more conservative and more fragile than others have claimed

frica’s middle classes are oft discussed but hard to quantify. The African Development Bank (AfDB) gamely tried to come up with an estimate of their numbers in 2011, placing Africa’s middle classes at around 350 million people. This had the merit of sparking debate, even if there were plenty who disagreed with the AfDB’s criteria of a daily income of between $2 and $20. What the AfDB calls the ‘floating middle class’ is suspect, even if this group shares some characteristics with its better-off middleclass peers. “These characterisations are always very fluid,” says Institut Français des Relations Internationales (IFRI) researcher Hélène Quénot-Suarez. She points to the strong regional disparities of the middle classes around the continent and their fragile nature: “There are some people for whom the end of the month is floating or poor, even if they start the month in the middle class.”

The strength of Africa’s middle classes remains a subject of controversy, particularly for companies wishing to target these consumers. In June, Switzerlandbased agribusiness Nestlé announced that it is cutting 15% of its workforce on the continent because it had overestimated the strength of Africa’s middle classes. “We thought this would be the next Asia, but we have realised the middle class here in the region is extremely small and it is not really growing,” Nestlé’s Equatorial Africa boss Cornel Krummenacher told reporters. It is unclear how much these comments reflect Nestlé’s operational issues or a wider trend, precisely because the data are so sparse. France-based distribution and retail company CFAO jumped into the breach in October, publishing the largest and most detailed study of the middle classes yet to emerge. Choosing five countries – Morocco, Nigeria, Kenya, Côte d’Ivoire and

ANTI-BLING

Who did they find? What is the average middle-class household like? A picture emerges of a frugal, striving class that is fearful of slipping backwards. Its members see themselves as custodians of a new morality, one that is ‘anti-bling’. They have stable incomes, often with several jobs and often with two people contributing to the household budget. More than 90% of them have bank accounts, compared with an African average of 15-20%. Significantly, more than two-thirds manage to save around $135 a month. While the average member of the Moroccan, Cameroonian and Kenyan ● ● ●

70%

of middleclass household heads have a university degree

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Spirits ● ● ● middle classes carries significant debt, there is much less debt among their peers in Nigeria and Côte d’Ivoire. These African households tend to comprise four to five people, with an average of 1.8 children. Education plays a key role in them. More than 70% of the heads of household have a degree, and four out of every five households are financing the education of at least one child. Often, the money from a side business pays for it. A 44-year-old public-sector worker in Nigeria explained to the researchers: “If we didn’t have the taxi, we could not put the children in private school.” The middle classes are acquisitive but also restrained. Virtually every household surveyed has a television and nine in every 10 have a refrigerator – which they fill on occasional trips to a supermarket, at least once a month. Food represents a quarter of their monthly spending. Housing fol-

Frequency of purchase

Wine/ Champagne

(average)

Nappies

Once a month or less

Beauty products

Rice

Fruit juice

Fresh fruit and vegetables

Housecleaning products

Pasta

Potatoes

Washing powder

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Once a week

Soaps

Fizzy drinks

Sweets

Twice a week

Fish

Dairy products

Meat

lows at 18%, and it is closely followed by education. So how do companies target these people, with their low budgets and spending? To a large extent, it’s about offering the right product. CFAO chairman Richard Bielle points to India, where companies like Suzuki offer low-cost motorbikes and Bic sells razors

More than twice per week

individually rather than in packs of 20: “With us, after years of only having more-expensive models, Yamaha finally came up with a $1,000 model and got 40% sales growth instead of 3%.” SMALL TOWN DUES

IFRI’s Quénot-Suarez also explains that distributors should pay attention to smaller cities. “Seventy per cent of urban growth in Africa happens in towns of under 500,000 people – don’t forget there are middle classes there.” And while CFAO is a gateway company for foreign brands seeking markets in Africa, its report gives some succour to local businesses. The middle classes in this study may not necessarily be politically active – Nigeria aside – with their members preferring to keep their heads down and uplift their families. But they do, however, show a strong preference for ‘Made in Africa’ products, and local manufacturers can keep one step ahead by being closer to local tastes. Despite the arguments in the CFAO-commissioned studies that the African middle classes are small but striving, it is easy for optimism to creep in. Researchers at BearingPoint predict that Africa’s middle classes will be 900 million strong by 2040. That would be bigger than the middle classes of China and India combined – something that may get the naysayers in Nestlé to rethink their cutbacks. ●

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debates Tough talk on development

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ACCRA, GHANA 20 November 2015 THE PLACE TO BE FOR AFRICAN LEADERS www.theafricareport.com

BUSINESS | LEADERS

PROFILE South African shareholders in the form of Nedbank and the Public Investment Corporation (PIC)pensionfundownnearly40% between them. The bank today has Qatar National Bank (QNB) as a major shareholder after it raised its stake to 23.5% in September 2014. HISTORY MATTERS

GUILHEM ALANDRY/DOCUMENTOGRAPHY FOR TAR

Ade Ayeyemi

Group chief executive officer, Ecobank Transnational

No more shadowboxing over leadership With its expanded continental footprint, new investors and a new chief executive, the Togo-based bank is poised for the next step, though there may be global trouble ahead

he Lomé-based panAfrican bank Ecobank has come a long way since its recent governance crisis. In his characteristically blunt fashion, Ade Ayeyemi, who became Ecobank’s new group chief executive in September, says, “This organisation went through a near-death experience two years ago. And now we’ve recovered, we need to power through.” This is not a dramatisation. Existential scandals repeatedly rocked the lender

in 2013 under the stewardship of Ivorian banker Thierry Tanoh. Hedge funds and activist investors were looking at the undervalued stock with sharp eyes. And perhaps, in some way, the old Ecobank did die: the ‘Ecobank de papa’, majority-owned by Nigerian and Togolese business interests, is no more. The bank has spread its wings over 35 countries in what it likes to call ‘middle Africa’, building an asset base of over $20bn, and with a new set of owners. THE AFRICA REPORT

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It helps, then, that the new boss has experience with global capital markets and the South African banking scene but also a sensitivity to history. “To be honest, I’m going to be standing on the shoulders of the people that came well before me. They’ve created a financial institution that is present in multiple countries in the continent. The job of building a house is done. It’s my job to make it a home.” He bats away any suggestion that the headquarters could leave the Togolese capital. Likewise, any hintthatEcobank,followingitspurchase of Nigeria’s Oceanic Bank in 2011, has become overly focused on the Nigerian market: “I haven’t lived in Nigeria for 16 years because I’ve been working across the continent. I didn’t get the job because I’m a Nigerian, I got the job because I’m a professional. And I hope people understand that I live in Lomé, I don’t live in Nigeria.” Prior to joining Ecobank, Ayeyemi spent more than 27 years with the US multinational financial services corporation Citigroup, rising to head Citibank’s subSaharan African operations from Johannesburg. As Citigroup cut back many of its international operations amid the fallout from the 2008 US credit crisis, Ayeyemi was tasked with boosting the bank’s African business portfolio to take advantage of the higher growth rates in Africa’s leading economies. Despite a quiet public demeanour, Ayeyemi has a reputation for strong management skills. The divided institution may require them as storm clouds gather over Africa’s economies. Ayeyemimayalsoneedtoputhis diplomatic hat on. “I think the tensions are no longer there, because

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LEADERS | BUSINESS

what we’ve done is to allow the institution to rise beyond individuals and go back to the reason why the founding fathers created Ecobank”, he says. The tensions he refers to grew out of the dismissal of executive director Laurence Do Rego, sacked by Tanoh in 2013 for blowing the whistle over a controversial salary increase. She was reinstated at the beginning of Albert Essien’s custodianship in March 2014. “I think people are mature enough to see that now the succession war is over we need to come together as a team and win in the marketplace with the customers,” says Ayeyemi. “And that is where the real fight is. As we go into 2016, there’s going to be turbulence in the environment and we don’t need to distract ourselves with shadow-boxing because of the leadership position.” In particular, he sees Ecobank’s advisory role as critical in the months ahead: “Remember – if it’s challenging for us, it will be challenging for our clients. It’s like when you enter a plane and you’re going to go through rough patches. If the pilot anticipates this and asks you to fasten your seatbelt, the impact on you becomes much less.” CENTRALISED PRODUCTS

But to do that, Ecobank needs to get its own house in order, a process started during the brief post-Tanoh tenure of Essien, who reached the statutory retirement age of 60 earlier this year. For Ayeyemi, this will go beyond simple consolidation, as Ecobank put an end to its big expansion push two years ago.

2011

2012

Instead, he wants to centralise the creation of banking products. “[There are] the lending products, the cash management products, the trade products: those things we’ll manufacture centrally,” says Ayeyemi. “We have letters of credit that are open in so many countries today. Given the level of technology, there has to be a way to do that in a central location or at least not more than two or three locations in the continent.” He points to the bank’s Accra technology hub as a possible place to start. Positive signs have come from the corporate investment banking segment, whose revenues have helped offset weakness elsewhere. Next on the agenda is cutting costs. This was already underway in Nigeria, with the absorption and rationalisation of Oceanic’s branch network, and Ecobank’s existing network. Here, as elsewhere, the retail operations and network of branches are the problem. “Today, our revenue on individuals is great, but our cost to serve is high,” explains Ayeyemi. Again, technology is mooted as the solution, in the form of mobile banking, with small-business owners also targeted. The bank also accepts that regulators will need to take a closer look at institutions with large international footprints. The International Monetary Fund recently issued a note on this subject. “We cannot deny the fact that we are becoming systematically important because we are in multiple locations […]. It’s like when an airline purchases a Boeing 747 or Airbus 380: when you put 800

2013

2014

people in one capsule, you become systematically important.” Ecobank will need to be at the top of its game to tackle the next phase in Africa’s economic emergence, particularly in the twin challenges of infrastructure and industrialisation. For the latter, Ayeyemi points to the need for better business environments. “If it’s going to take people more than 80 days to get permits issued, then nobody is going to come.”

MANAGING ECOBANK’S BOUNCEBACK 1985 Graduated with a degree in accounting from Obafemi Awolowo University 1998 Worked at Citibank as a managing director

CURRENCY CONCERNS

September 2013 Became chief executive of Citigroup’s sub-Saharan Africa division

In particular, he takes aim at governments’ attempt to shore up currencies. “I think manufacturing will only happen to the extent that we do not subsidise imports. In the countries that artificially try to hold their currency, they are exporting jobs and importing poverty.” Forinfrastructure,Ecobank’snew shareholder configuration comes intoplay.“Iftherewasapowercompany that wanted to build electricity infrastructure in, say, Nigeria, Ecobank wouldn’t have been able to do it on its own. But when you teamtogether Ecobankknowledge

September 2015 Appointed group chief executive for Ecobank Transnational

“Today, our revenue on individuals is great, but our cost to serve is high”

2015

Banking on growth

Ecobank's share price in Naira

10.00

10/29 18.60 THE AFRICA REPORT

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SOURCE: BLOOMBERG

15.00

oftheenvironmentwithNedbank’s structuring capability, [and] the financing power of QNB and PIC, it becomes an easier problem to solve,” explains Ayeyemi. The role of long-term investors like pension fund PIC is particularly relevant here. It could help in matching the long tenors needed for infrastructure projects. “We need to figure out how to structure the funding mix to be able to take the project-finance risk and post-project finance – to structure that and input those instruments back into the fixed-income markets, through pension companies investing in it together with insurance companies that have long, patient capital.” The new tricks of an evolving bank. ● Nicholas Norbrook

TAR Debates

Democracy versus development The first ever debate organised by The Africa Report pitched the supporters of ‘developmental sprints’ against those who argue democratic institutions should come first

he failure of many African governments to deliver development consistently to their populations leaves many people to ask the question: Should Africa look to countries like Rwanda and Ethiopia, where economic growth takes precedent over political pluralism? It is hard to argue with the development records of the administrations in Kigali and Addis Ababa, be it on shared growth, education or maternal health. So do people want bread or justice? Is the danger that African countries may hope for a Lee Kuan Yew but could end up with a Vladimir Putin?

His speech recalled his personal experience as a young man living under curfew during a military dictatorship in Ghana, where he saw his brother mistreated at the hands of soldiers. The rest of the debate took as its starting point the great economic sprint that Africa needs to make if it is going to provide jobs for the 300 million Africans who will join the labour force over the next 15 years.

The Africa Report sought some answers at the inaugural TAR Debates, at the Mövenpick Hotel in Accra, Ghana, on 20 November, inpartnershipwiththeMoIbrahim Foundation. For this first event, a distinguished panel examined the question: What should be the priority, democracy or development? John Mahama, Ghana’s president, launched the discussions in front of a glittering crowd, saying: “Democracy will never be a perfect system because people will always be imperfect beings.” He added: “But the problem with dictatorships is that youdon’t get to choose whichdictatoryouaregoingtoget.” THE AFRICA REPORT

QUALITY OF DEMOCRACY

As President Mahama pointed out, many Asian countries have had “authoritarian governments that are able to make quick decisions andbringaboutimmediatechange or unprecedented growth.” On the ground, the call for tangible progress often wins the argument.InconjunctionwithGeoPoll, The Africa Report surveyed people •

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ALL PICTURES BY FRANCIS KOKOROKO FOR TAR

Our debaters included, from left to right: Trevor Manuel, former South African finance minister; Carlos Lopes, executive secretary of the UN Economic Commission for Africa; Tedros Adhanom, Ethiopia’s foreign minister; Patrick Smith, The Africa Report’s editor-in-chief; Mo Ibrahim of the Mo Ibrahim Foundation; Audrey Gadzekpo, a lecturer at the University of Ghana; and Jay Naidoo, labour activist. Below, Ghana’s President John Mahama

in Ghana, South Africa, Uganda and Cameroon about the importance of democracy and development. In Ghana, 31% of people questioned wanted democracy prioritised, whereas 67% wanted development – a result echoed across the other countries. This shows the disillusion many have with their governments. “A democracy that doesn’t produce results is an empty promise,” said Arancha González, executive director of the Geneva-based International Trade Centre, during the debate. “Can we say that there is freedom when so many politicians spend so much money to contest elections?” For South Africa’s former reconstruction minister and labour activist Jay Naidoo, the continued push of money and power into democracy is dangerous and is corrupting government, leading to cases of “demokratura”, where you have the window dressing of democracy without genuine representation of the people. “We are seeing electoral authoritarianism,” he explained. THE AFRICA REPORT

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N ° 76

Strongman rule was one of the many governance weaknesses discussed at the debate. One question from the hall: “How do we get a democracy of ideas and issues rather than a democracy of tribalism and identity?” On that front, the debate participants were unable to come up with a one-size-fits-all recommendation. Ultimately, panelists on both sides of the debate agreed that the quality of the democracy is crucial. Experts in attendance also provided solutions for reform.

Franklin Cudjoe, head of Ghana thinktank the IMANI Center for Policy & Education, pointed to the phenomenon of the “imperial presidency”,wherebythepresident has the ability to directly appoint 4,000 posts, leaving huge room for corruption and partisan choices. He argued that reforms must create checks and balances on executive power. In the end, the debate was summed up by Tedros Adhanom, the foreign minister of Ethiopia, who was keen to stress Ethiopia’s commitment to both sides of the argument: “Bread without democracy is bitter. Democracy without bread is fragile.” The Ghana debate was just the first in what promises to be a series of debates on the theme of tough talk on development. If you have suggestions for future debate topics, please look for us on Facebook or Twitter. ● Nicholas Norbrook

CLASSIFIED ADS

IS LEADING IN AFRICA DIFFERENT FROM LEADING IN THE REST OF THE WORLD? WHY OR WHY NOT? By Munyaradzi Chifetete, Zimbabwe

REIMAGINING AFRICAN LEADERSHIP – THOUGHTS ON STEERING AFRICA “I am the spirit indigenous of a time that existed before me, Who understood that time was nothing but A space that existed before me, To give opportunity to the man that existed after me You have to understand that for me to be an African, I have to be something that breathes Oh, of everything that lived before me…” – Larry Kwirirayi, “Afr-I-Can”

“Uongozi” means leadership in Kiswahili, and inspiring and strengthening leadership is the core purpose of our organisation. Based in Dar es Salaam, T anzania, Tanzania, UONGOZI Institute is dedicated to supporting African leaders to attain sustainable development for their nations and for Africa. The African Leadership Forum (ALF), an initiative by H.E Excellency Benjamin W illiam Mkapa, former William President of T anzania, a Tanzania, supported by UONGOZI Institute, was held on July 30th, 2015 in Dar es Salaam. The essay competition awarding ceremony which is held concurrently with this event aims to providing a space for the youth of East and Southern Africa and the next generation of leaders in the region to contribute to important discussions on leadership. A grand prize of USD $2,000 is awarded to the overall ! "##$%& ! '$%$ ( ))*)(+ *)(+ * .$ !"##$%& !'$%$ *,, -.$ winners are selected. This year the second prize winner received $1,000, third prize $500, fourth prize $300 and ,)' / %"0$ 1 2334 -,)' /%"0$ 12334

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CLASSIFIED ADS

Twenty-one Tw wen nty-on nty-one one year y old o Munyaradzi Chifetete from Z mba Zim abwe e rec receives ceive an a award certificate from former Zimbabwe President of Botswana H.E Festus Mogae after being P side Pr Presi ent o Botswan Bo otswa announced of UONGOZI Institute’s an nno oun nced ced overall over ove erall winner w Leadership 2015 held at the African Lea Le eade ership p Essay Essa ay Competition Co Leadership Lea ade ership p Forum Foru um in n Dar es Salaam this July. Looking on Chief Officer for UONGOZI Institute on is the t Ch hief Executive Execu u Prof. Pro of. Joseph JJosep eph ph Semboja. Sem mbojja

The Th he ALF A was also attended by former form rmer Presidents Oluseg egu eg gun Obasanjo of Olusegun Nig N igeria, geria Jerry geria, J Je Nigeria, Rawlings Ghana, ana Ba B of Ghana, Bakili Muluzi of Ma awi, Malaw wi,, Festus F Festu Fes est st s Mogae s M Malawi, of !"#$%&' '& & &'( &'( )*+,-./'0)*+,-./'0!"#$%&'& Poha hamb mba of N Nam amibia, bia, with with Pohamba Namibia, he e overarching overa erarch ra arching g theme the eme me the ““Mo “M Moving Towards To owa an n of “Moving Integrat Int grated d Africa: Africa Africa: What Wh hat Integrated n eds to be don one?” needs done?” T one-day on nen ne e---day foru e e-day orum m was The forum kick-sta k-started k-star stta ta ed by a public kick-started plena lenary which whic hich gathered ga gather plenary 1"2- #3&' #3&' 456 456 ,-0 ,-0 *'7/-'#*&8 *'7/-'#*&8 1"2ers and thinkers inkers across leaders nt, including inclu the continent, the former Heads of State, and leaders from business, government, civil society and academia. The keynote address was delivered by His Excellency Yoweri Kaguta Museveni, Yoweri President of the Republic of Uganda. The African Leadership annually. The Forum is held annually. +2$# 9"2/1 9"2/1 #"", #"", .8&:.8&:- *' *' ;64< ;64< +2$# with the theme ‘Meeting the Africa’s Challenges of Africa’s Transformation’. Transformation’. For more information: Visit: www.uongozi.or.tz www.uongozi.or.tz Visit: info@uongozi.orr..tz Email: info@uongozi.or.tz Call: +255 22 2602917

With that being said, you realize alize a lize e that th t Africa is o on a dif diffe ffe ff f rentt developmental path th from m the th rre est est of the world. Our challengess a are e vvasstly tly dif d fffe eren nt and an th the e wa way ay we approach the these e pr probl blemss will w &.0'. ,%+ "+(/.-",+*) ('& %$"#"!(".$* ,%+ &.1"#'* (1 ( -,'"#'.'"7 6$,'51#&. "4. +(2#& &.3.$,2!.'" occurring on our continent nt thatt has h s seen see en us leapfrog le eapf pfrog g most mo ost tec technical adv advanc anceme ents, nts w we fa face ce th he threat of diseases such ha as m mal alaria ria an nd HIV H , ext xtrem me p pove ertyy and looming loomi ming g climate climat ate te change chan nge. nge e. Our population is booming ing ng, n g and d emp mplo ploy oyymen ent cchall ch hallenges lleng gess resu resultin ng from m thiss are a e re real al and and ass assu ure ur ed. ed d However, Africa has has all a it ne eeds ee ds tto tth hwar art th these ese e thr hreats ts. Its s leaders eade ders rs wil w need wi will need d to o ma mana anage ge th th he abundant nt natu na atural a tural rreso sou ources es o on the th cont ntinen ent to o pro ovide e econ nomic omi mic op oppo pportu pp porrtunit nities e for orr all. a l. Thes The T hese se e res es sources urces a are are ours rs and dA Africca a’s leade le dershi leadership hip should sh uld no not ot be ashamed ash asha amed me ed d to o claim cla c aim m them, tth the them em,, and a and as as they tthe th do so, so need n to t be entrepreneurial en entrepr preneu eurial al in i identifying id dentify ntif tifying ng how ow we can can best be utilize util tilize l ze e our assets asse sets s to o achieve a achiev prosperity rity. In a as much ch as ch a Africa Aff ca is a continent con cont ntinent ine that th ha req requires and pr provides rovvides the e op opportunity ppo port rtunit un uni nitityy for a unique ni uniqu type of leadership, type leadership ership,, we cannot cann ann not ignore ign gnore nore the he fact that ourr continent cconttinen nt does d do oess not nott exist e ex xis is st in a bubble. bubbl Te Te ech ec echnol chnology gyy tthrough thrrough iinter nternet conn onnectivit tivity has opened a ne ew gate g off reality ty. Our Ourr youth y are being bein exposed to exp exposed o the h outside outsid de world d more ore and more and are learning le ea arnin ng about abo out other herr cultures cu c ltu ures other than tha th ir own, in thei n and an outside outsid the e continent. c This new knowled dge e is sha s aping i tthe e way wayy Africans think a o abo about out ut the world wor and their the responsibility re to our planet. Th he African Africa an leader leade ea ad de er h has ha has, as, therefore, th as, the unique challenge challeng of keeping the African agenda a top p prio orityy in tth he min mind dss of of Afric ca’s youth. In order to do so, African leaders need to exploit new media that tha at has ha ta ake en th he e wo world by by storm. The ormation technology carries in n Africa a are a e en norm rm mou ou African ous. Afri an leaders Africa Afric leade potential capabilities that information should be pushing the ICT age in Africa because if we do not no par p rticipat c pat ate no now w, we w will willl n no not ot be b part mbers of the global community, we we shou sh hou h ould o d em e emphasize mph phasiz asize the asize th he e need n nee ed to of tomorrow’s reality. As members 2+,/.-" ,%+ 69+#-(' 3#.8 ", "4. 5$,;. ('& #'=%.'-. "4. 8,+$& 3#.87 >4#1 -(' ;. &,'. derr to o sh are re e ou stor orie ries a ast as stt through harnessing mobile cellular access in Africa in order share our st stories and va vast vation onss tto o cchallenges challe alleng nges ges that tha th hatt iinvolve inv nvolvve v contributions internationally as well as provide unique innovations access to services and resources. <#"4 5$,;($#:("#,') 8. 0'& "4(" 69+#-( ,--%2#.1 ( 12(-. #' "4. 8,+$& 84.+. #" #1 +.?%#+.& ", 8,+@ n the continent are ccomm ommon on is iissue ssue es with the rest of the globe. Some of the issues that we face on common issues mon solutions solutio o io olution that are faced elsewhere on Earth. Being common problems, they require commo e will that require collaboration from Africa’s leaders and other leaders in the world. Thus, we need to collaborate with the rest of the world in the way that we solve these problems in an endeavour to preserve the planet for future generations. Finally, Africa is a rich continent, with a diverse array of history, culture and people. Its resources, at it needs to take offf. f Leading it is not only a challenge, but an human and natural, are what honour that most people would dream of experiencing. What it takes is for current and future leaders of Africa to appreciate that this space that they hold or will hold, existed before them so that they could create opportunities for the generations that will exist after.

DOSSIER MINING

End of the supercycle Many commodity prices have dropped since 2014 and companies are scrambling to deal with the aftermath and plot a path to long-term growth in African mining projects By Michelle Madsen

COMPANIES & MARKETS

CHARLES O’REAR/CORBIS

he deepest rout in commodities prices in more than a decade has seen a fundamental reconfiguration of Africa’s mining sector. The past year has seen China’s growth slow sharply, driving prices down and prompting waves of mines across the continent to shut up shop, regardless of size. The resource landscape has never looked bleaker for some – from the troubles of seemingly invincible Swiss commodities giant Glencore to the hundreds of exploration and development projects quietly disappearing from company prospectuses. Mine closuresandprojectcancellationshave also gutted the fortunes of currenciesdependentonmineralexports. With the commodity supercycle showing no signs of swinging back into a bull market, the short-term outlook for Africa’s miners given by international funding bodies and banks remains gloomy. Some countries and companies are better positioned to weather the storm. And despite the risky environment, a clutch of investors is poised to step in to pick up potentially lucrative projects that cash-constrained owners have been looking to dump. In this falling market, the profitability of even high-grade mines has been compromised, with miners large and small looking to rationalise their assets and strip businesses to the core. Swiss mining giant Glencore, which championed its diversified structure to investors at the time of its 2011 London listing as a safeguard against dropping prices in any one product, has emerged as one of the more unexpected victims. Glencore saw its share price dive by 30% overnight in September after a London-based analyst questioned the viability of the company’s huge balance sheet.

In response, Glencore’s management team has sped up its asset rationalisation process, imposing cuts to loss-making arms of the business in a bid to reduce debt. In September Glencore’s Katanga copper-mining unit in the Democratic Republic of Congo (DRC) and its Mopani copper mine in Zambia were suspended, knocking 400,000tn of copper cathode out of the market and cutting more than 4,000 jobs. GLASENBERG LASHES OUT

Glencore’s chief executive officer Ivan Glasenberg, a South African himself, has said that the company remains committed to the continent and that it plans to reopen closed mines if they can be made competitive. Glasenberg has been outspoken against his rivals’ policy to keep loss-making mines open, suggesting that to do so will doom the entire sector to failure. Some of Glasenberg’s harshest criticisms have been levelled against mining majors Rio Tinto, BHP Billiton and Vale, which have all raced to ramp up output in a bid to outpace their rivals as the lowest-cost producer of iron ore. While BHP Billiton, Vale and Rio Tinto still retain a footprint in Africa, all have refocused towards their core businesses in the past three years. Amid the price slump, which has driven iron ore prices down to below $50/tn from 2011 highs of more than $180/tn, any projects deemed high risk have lost their lustre. Rio Tinto sold its 78% stake in Zimbabwe’s Murowa diamonds in June after the government announced it would merge all local producers into one company that the state would hold a 50% stake in. Rio Tinto has also been accused of dragging its heels over the development of its half of the Simandou project in Guinea, pushing money not into Africa but into Australia,

DOSSIER | MINING

where its iron ore business is on track to overtake that of Vale as largest in the world. It is not expected that the company will bid for the second half of the Simandou project when the Guinean government restarts a long-awaited tender process for the concession. While major miners retrench to ride out the storm, high-cost juniors, many of which only started production at the top of the cycle, are foundering, if not sinking. In West Africa, Ebola outbreak, coupled with dramatically declining prices, practically halted the development of all new mines and saw operations at some more established projects grind to a halt. African Minerals’ Tonkolili iron ore mine in Sierra Leone ran into financial difficulties and stopped production at the end of 2014. Its partner, Chinese state-owned enterprise Shandong Iron and Steel Group stepped in to take over Tonkolili as African Minerals went bankrupt in April 2015. Despite assurances given by Sierra Leone’s

president, Ernest Bai Koroma, output from the mine is yet to restart and contractors are yet to be repaid outstanding debts. Close to Guinea’s border with Liberia,London-listedjuniorSable Mining is stuck in an impasse with ArcelorMittal over a key rail line that would give its Nimba iron ore projectaccesstoaport.Progresson the Nimba project has gone quiet and recently the company’s focus has swung back to chief executive Andrew Groves’s country of origin, Zimbabwe. The company signed a deal in September to develop a 600MW coal-fired power station with major Chinese state-owned enterprise CITIC. SP Angel mining analyst John Meyer tells The Africa Report that while the perception among some in the market was that publicly listed companies were bearing the brunt of the slump, in reality the private end of the market was suffering equally, if not more. “The shake-up has caused people who were developing projects to

55% Drop in the market capitalisation of South Africa’s top 35 listed miners from June to October 2015 SOURCE: PWC

INTERVIEW

Alan Davies Chief executive for diamonds and minerals, Rio Tinto

Attractiveness is more important than short-term fluctuations THE ANGLO-AUSTRALIAN miner currently has exploration projects in Botswana, Gabon, Mozambique and Namibia. It sold its Mozambican coking coal business in 2014 for $50m after buying it in 2011 for more than $3bn. Rio Tinto’s chief executive for diamonds and minerals, Alan Davies, explains how he sees the company’s future in Africa: “When we look to invest in a project, it is for the long term. So long-term attractiveness and potential is far more important than short-term price fluctuations.” He says that

the current period of low prices will lead to another cycle of growth: “Mining has played a leading role in Africa’s strong economic performance – and, given the fact that a third of the world’s mineral reserves are in this continent, that’s likely to continue.” Davies argues that miners and government need to rethink their strategies: “We have been operating in Africa for many decades and the potential is huge, but there is a need for generational thinking by industry to prioritise long-term benefits or risk undermining the partnership

with the host nation and, in doing so, the long-term viability of the enterprise.” The downturn is leading governments to emphasise diversification again, and Davies says that companies have a role to play: “In many developing nations, mining can be the most important channel for foreign investment. As an industry, we are uniquely positioned to act as catalysts for […] broader economic growth. The ideal outcome sees mining assist with building more resilient communities and indeed stronger and more diverse economies.” ● M.M. THE AFRICA REPORT

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throw in the towel, so some people are picking up projects at bargain prices,” says Meyer, adding that exploration companies in particular were struggling to stay afloat. The burning question is who is ready to invest? China has long been seen as the go-to partner for infrastructure-heavy, capitalintensive African mining projects. But with its government in the process of reforming the stateowned enterprise sector, China has adopted a more cautious attitude towards investment in Africa and greenfield investment has plunged in the past year. GUINEA ASSETS

A number of privately owned Chinese companies continue to pick up assets, however. China Sonangol took over the Kalia iron oreprojectinGuineawhenitspartner Bellzone collapsed last year. Also in Guinea, China Hongqiao started mining bauxite from a joint venture project in March. A more hopeful picture emerges from a handful of cash-rich junior gold miners. Aureus Mining in Liberia has stepped in to pick up three new gold licences adjacent to itsNewLibertymine.SouthAfrican Sibanye is also looking acquisitive, trading on its low overheads topick up attractive assets at low prices. “Sibanye is the nimble up-andcomer and aims to maintain this as Randgold has done,” an analyst who requests anonymity explains. In the DRC, Australian-listed junior Tiger Resources received a $165m investment in the Kipoi copper project from the International Finance Corporation in October, allowing it to refinance and expand its operations. South Africa’s Industrial Development Corporation said in October that it planned to invest in Alphamin, a tin miner with operations in North Kivu province. While some level of investment is still flowing into the mining space, the commodities slump has been seen by some as an opportunity for African economies to diversify away from the resources space and into sectors that guarantee higher returns for citizens of the countries themselves. ● N ° 76

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D E C E M B E R 2 015 - J A N UA R Y 2 016

Experience the Progress.

www.liebherr.com info.lex@liebherr.com www.facebook.com/LiebherrConstruction

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DOSSIER | MINING

The huge Kpeme phosphate mining project represents a significant boost for Togo

phoenix-like moment for an industry that was once a pillar of the Togolese economy, representing 40% of state revenues. Production fell from 3m tonnes in the 1990s to under 1m currently. While this contract reinforces Elenilto’s stake on the continent, where the company already has oil andminingprojects,foritsChinese partner Wengfu this is a first. The state-owned group, a world leader in phosphates and fertilisers, will provide about 40% of the funds for the Kpeme project. The company is expanding internationally, and Wengfu is seeking further opportunities on the continent. The firm is said to be in discussions with Morocco, Tunisia and Senegal.

JACQUES TORREGANO FOR JA

WORLD-CLASS PROJECT

PHOSPHATES

Green ore glimmers

Low prices are not putting off international investors, who are piling into the phosphates sector in Togo, Guinea-Bissau, Gabon and Senegal, confident of future fertiliser needs

s renaissance in the air for the phosphate sector? Multinationals are jockeying for position, seeing potential in the continent’s push for food security and its current low fertiliser use: 4.7kg per resident compared to 200kg in India or China. While phosphate prices have fallen, with good-grade ore costing about $100 per tonne compared to $400 in 2008-2009, investment remains buoyant. In early September, Togo awarded the huge Kpeme project to extract and process carbonated phosphate to Elenilto, the Israeli

group led by Jacob Engen. With one of the largest deposits in subSaharan Africa (reserves are estimated at 2bn tonnes), the $1.4bn project will see the construction of a phosphoric acid plant and a fertiliser plant in the next three years. In the long term, the 30-year concession is expected to yield more than $28bn in revenue, with annual export of 3m tonnes of concentrated phosphate, 500,000 tonnes of phosphoric acid and 1.3 million tonnes of fertiliser products. And, it is hoped, it will create 1,000 new jobs. It is a THE AFRICA REPORT

•

Several days after the announcement of Elenilto’s and Wengfu’s arrival in Togo, Toronto-based GB Minerals said it would invest in Guinea-Bissau’s Farim phosphate project, which it calls “world-class”. According to CEO Luis da Silva, the deposit would allow the production of 1.75m tonnes of phosphates per year for 25 years. Initial start-up costs would be low, around $193.8 million. “The market price of rock phosphate is at its lowest level since 2007 and no one is sure that it will rise significantly. Under these conditions, investments carry a lot more risk and investors are reluctant to follow through,” says Imad Bouziane, vice president for Africa andtheMiddleEastatUSchemical and fertiliser trader Nitron Group. “Given the current market situation, the production costs of the Farim project in Guinea-Bissau remain, from my point of view, high,” he continues. “There is little chance that we will see this project develop in the short term. The same holds true for Togo, where the layer of carbonated phosphate targeted in ongoing discussions is deep and expensive to extract”. The problem, according to Bouziane, a former African director for the Moroccan ● ● ●

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● ● ● group Office Chérifien des Phosphates (OCP) and the US firm Transammonia, is that although it makes sense, in theory, to process phosphate into fertiliser locally, investments would have to be made in high-capacity units that can benefit from economies of scale and compete with market leaders. But the global fertiliser market is currently in over-capacity and the world’s largest producers, whether Russian, American or Chinese, are themselves seeking markets on the continent. “These competitors haveamajorasset:backhomethey produce fertilisers at competitive prices and have, for the most part, amortised their industrial investments”, says Bouziane.

UNSTOPPABLE OCP

This has not cowed the industry leader, Morocco’s OCP, which owns over half of global reserves. Though previously focused on American and Asian markets, OCP announced a partnership in 2014 with Gabon’s Société Equatoriale des Mines to build two factories in Gabon. A total of $2bn is allocated for the projects and joint output is anticipated at 2m tonnes by 2018. OCP also wants to build another Moroccan plant in Jorf Lasfar for $600m. Its production of 1m tonnes would be earmarked for sub-Saharan markets. Onto this packed stage arrives Indonesia’s Indorama. The firm bought up 78% of Industries Chimiques du Senegal (ICS) in August 2014. The Indonesian conglomerate took over as majority shareholder from the Indian cooperative IFFCO, which retains a 6.78% stake, by offering what ICS needed most: more cash. One week after signing the agreement, Indorama spent $100m on clearing the debt owed to subcontractors and refurbishing the group’s three main sites in order to relaunch production. These are Taiba, a mineral deposit 100km from Dakar, Darou, a phosphoric acid production site near Taiba, and Mbao, a fertiliser production site in a Dakar suburb. In all, says Alassane Diallo, CEO of ICS, “Indorama is committed to investing $225m to

ULRICH LEBEUF/M.Y.O.P.

Tunisia’s CPG hits the rocks THE COMPAGNIE DES PHOSPHATES DE GAFSA (CPG) lost €8.8m in 2014. Prospects for the Tunisian company continue to look gloomy as it struggles to recover from the disruption caused by the 2011 revolution. In the first eight months of 2015, CPG produced only 1.6m tonnes, well below expectations of 4.2m tonnes, says Hafedh Ben Yahia, who is responsible for monitoring and production control. The problem is recurrent strikes, including by the 1,700 workers of the Société Tunisienne de Transport des Produits Miniers (STTPM). Due to depleted raw materials stocks, the entire chain of production, from extraction to processing, was stopped from the end of 2014 until March 2015. The firm, which used to represent 4 per cent of Tunisia’s GDP and 10 per cent of its export revenues, posted losses of over €1bn between 2011 and 2013. To get its processing plants back in working order, it is reconstituting its stocks of phosphates, which rose from 24,000tn in May to 250,000tn in August. Tunisia will struggle to regain its rank as the world’s fifth phosphate producer. ● Frida Dahmani in Tunis

ensure a total renovation of all the production units.” These efforts are beginning to pay off. The Taiba mine, whose reserves are estimated at 60-70m tonnes, produces 3,500tn per day of marketable phosphate. And the production capacity of phosphoric acid at the two Darou plants has doubled to 2,030tn per day. Most of the production is sold to India. ICS has a fertiliser production capacity of 300,000tn per year, which is greater than Senegal’s currentneeds.A secondfertiliserplant is planned for the Mbao site, which will boost capacity to 1m tonnes and allow export to the 16 members of the Economic Community of West African States (ECOWAS), as well as to the rest of Africa. But can they remain costcompetitive and get their product to farmers? Elenilto and Wengfu

say they can produce at low cost due to a connection to the West African gas pipeline near the Autonomous Port of Lomé. GB Minerals says its production costs will be, on average, $52 per tonne for the lifetime of the Farim deposit, which is located near the Atlantic Ocean, providing access to international and African markets. As for OCP, it is engaged in an ambitious policy to invest $1bn per year through 2020 and is counting on its underground pipelines to reduce transportation costs. The group is relying on regional corridors, including Dakar-Bamako, Abidjan-Ouagadougou and CotonouNiamey, to distribute fertiliser produced for African markets. ●

2bn tonnes Togo may have up to 2bn tonnes of phosphate reserves, the largest in sub-Saharan Africa

Amadou Oury Diallo and Stéphane Ballong for Jeune Afrique

SOURCE: ELENILTO

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102

COUNTRY PROFILES With the downturn in commodity prices, an apparent shift in China’s economic structure and predicted lacklustre global growth rates, 2016 is looking to be a challenging year for many African governments

161 WEST AFRICA

COUNTRY REPORT EDITORS

By Marshall Van Valen

Richard Synge and Marshall Van Valen

COUNTRY REPORT CONTRIBUTORS

186 ALGERIA

134 ETHIOPIA

177 NIGERIA

110 ANGOLA

157 GABON

138 RWANDA

164 BENIN

169 GAMBIA

158 REP. OF CONGO

112 BOTSWANA

170 GHANA

165 BURKINA FASO

172 GUINEA

159 SÃO TOMÉ E PRINCIPÉ

130 BURUNDI

173 GUINEABISSAU

150 CAMEROON 166 CABO VERDE

136 KENYA 113 LESOTHO

179 SENEGAL 139 SEYCHELLES 180 SIERRA LEONE

152 CENTRAL AFRICAN REPUBLIC

189 LIBYA

153 CHAD

114 MADAGASCAR

131 COMOROS

115 MALAWI

167 CÔTE D’IVOIRE

175 MALI

132 DJIBOUTI

190 MAURITANIA

142 TANZANIA

154 DRC

116 MAURITIUS

181 TOGO

187 EGYPT

191 MOROCCO

193 TUNISIA

156 EQUATORIAL GUINEA

117 MOZAMBIQUE

144 UGANDA

118 NAMIBIA

122 ZAMBIA

133 ERITREA

176 NIGER

124 ZIMBABWE

174 LIBERIA

140 SOMALIA 119 SOUTH AFRICA 141 SOUTH SUDAN 192 SUDAN 121 SWAZILAND

Arteh Abdourahim Abdillahi, Léonce Bitariho, Nuno Andrade Ferreira, Mathieu Bonkoungou, Frank Chikowore, James Copnall, Frida Dahmani, Hippolyte Donossio, Denis Dumo Scopas, Emilie Filou, Umaru Fofana, Jacey Fortin, Ilya Gridneff, Charlie Hamilton, Celeste Hicks, Frank Jomo, Reinnier Kazé, Jon Marks, Jeff Mbanga, Billie Adwoa McTernan, Marafaele Antonia Mohloboli, Olivier Monnier, Gregory Mthembu-Salter, Madjiasra Nako, Samuel Obiang Mbana, Roger Murray, Oheneba Ama Nti Osei, Crystal Orderson, Bram Posthumus, Nadia Rabbaa, Amira Salah-Ahmed, Saliou Samb, Gerhard Seibert, Alex Duval Smith

DATA SOURCES Population (2013), population growth (2010-2015), life expectancy at birth (2013) and position on the Human Development Index (2014) – UN Development Programme. Adult literacy (multiple years) – UNESCO Institute for Statistics. GDP per capita (2015 estimate), inflation (2015 estimate), current account as % of GDP (2015 estimate), GDP growth (2013-2016) – IMF World Economic Outlook Database. Foreign direct investment (2014, inflows) – UN Conference on Trade and Development. Mobile phone penetration (2013, mobile cellular subscriptions per 100 inhabitants) – International Telecommunications Union. Key export (2013) – AfDB African Economic Outlook. Last change of leader – The Africa Report research.

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103

183 NORTH AFRICA

127 EAST AFRICA

147 CENTRAL AFRICA

he year ahead is likely to challenge African governments that are not well prepared for the current downturn in commodity prices. The impact will not be felt universally across the continent, as the drop in oil prices is a boon for importers and a threat to exporters. The International Monetary Fund (IMF) revised its 2016 growth predictions downwards a few times in 2015. It said in October that economic growth for sub-Saharan Africa will drop from 5% in 2014 to 2.8% in 2015 before rebounding to 4.3% in 2016. The countries of the Middle East and North Africa are expected to follow a similar pattern, with growth due to fall from 2.6% in 2014 to 2.5% in 2015 before rising to 3.8% in 2016. However, those figures depend on the IMF’s assumptions about the Chinese economy anditstransitionfrominvestment-fuelled to consumption-led growth. The shift in China’s economic structure suggests that commodity prices will take quite a long time to hit their recent peaks. That means the countries that have been reforming, investing in non-commodity sectors of the economy and saving for inclement weather should perform the best over the next few years. COUNTERCYCLICAL INVESTMENT

107 SOUTHERN AFRICA

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None of Africa’s oil producers have succeeded in taming the boom-bust cycle. In June, Nigeria had just $2bn in its excess crude account, which is meant to collect money when prices are high to be spent whenpricesturnlow.Meanwhilethegovernment of Equatorial Guinea has been talking up the potential of its economic diversification but was set to be one of theworld’sworst-performing economies, with forecast growth of -10.2%. One of the few governments with the savings required for countercyclical investment is Botswana. With weaker diamond prices this year, President Ian Khama announced that the government will invest some of its $8.8bn of foreign-currency reserves in agricultural, manufacturing and tourism projects.

COUNTRY PROFILES While the economies of francophone countries have tended to lack the dynamism of their anglophone counterparts, they have recently been making advances.IntheWorldBank’s2016Doing Business report, 14 out of the 17 countries participating in the Organisation pour l’Harmonisation en Afrique du Droit des Affaires had improved their business climates over the past year. The Mo Ibrahim Foundation announced the results of its governance index in October 2015 and it, too, pointed to progress in Africa’s francophone countries. Senegal and Tunisia were again in the top 10 performers and the most improved country in the past four years remained Côte d’Ivoire. The Mo Ibrahim Foundation’s board member Nathalie Delapalme also explained that francophone countries such as Madagascar, Morocco, Togo and Tunisia are improving their general governance scores.

SNAPSHOT AFRICA – HOW THE CONTINENT SHAPES UP

Top 10 sub-Saharan countries exporting to China in 2014 % of total exports

Sierra Leone Rep. of Congo Angola Zambia DRC South Africa Gambia Liberia Zimbabwe Benin SOURCE: IMF

Murky money

00 00

Africa rank Global rank

Mauritius

1 23

Liberia Ghana

2 33

3 48

REINING IN OIL SUBSIDIES

The era of lower commodity prices offers governments the opportunity to implement reforms that will strengthen finances and economic performance. Low oil prices have meant that Morocco’s reining in of spending on oil subsidies has been less painful for the government than it might have been had prices been higher. Not all governments are following that example though. In July, Nigeria’s PresidentMuhammaduBuhariexplained that there are more important issues to address in the country’s oil sector – like corruption and bunkering. However, the previous government’s 2015 budget included major reductions to the fuel subsidy fund, which dropped to about $500m. The money saved could be used for productive investment, especially amid worries about the oil sector. With continuing problems at South African state-owned companies like South African Airways and PetroSA, reform will be on the agenda in the year ahead. The parastatal oil and gas company is cutting staff, while the finance ministry is working on new laws to allow the government to get involved more directly when companies face problems. The need to break the cycle of regular ‘jumpstarting’ programmes is ever more apparent as the state now estimates that it has issued $31.9bn in outstanding guarantees to parastatals. Like many of the continent’s electricity utilities (see page 66), they could benefit from improving efficiency, reducing costs and encouraging new technologies to expand capacity. ●

Financial Secrecy Index

South Africa

4 61

Botswana

5 62

SOURCE: TAX JUSTICE NETWORK

World Bank’s 2016 Doing Business Ranking Mauritius

Change from 2015 ranking

Best

-4

Rwanda

-6

73 74 75

South Africa Tunisia Morocco

Worst

-30 -14 -4

182

DRC

185 187 188 189

CAR South Sudan Libya Eritrea

2 -1 -1 -1

SOURCE: WORLD BANK

Mo Ibrahim Index for Overall Governance (score out of 100)

SOURCE: 2015 IBRAHIM INDEX OF AFRICAN GOVERNANCE

104

Mauritius

Best

74.5 74.2 73 70.4

Cabo Verde Botswana South Africa Namibia Eritrea

Worst

29.9 28.3 24.9

Sudan CAR South Sudan Somalia

8.5

79.9

19.9

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105

Fitch sovereign ratings COUNTRY South Africa Morocco Namibia Lesotho Nigeria Seychelles Tunisia Angola Republic of Congo Gabon Kenya Rwanda Uganda Cape Verde Cameroon Cote d’Ivoire Egypt Ethiopia Ghana Mozambique Zambia

% of total government spending

10%

Potential gas boom discovered resources

Total estimated reserves Billion cubic metres

Mozambique

6,695

SOURCE: MCKINSEY & COMPANY, BRIGHTER AFRICA 2015

Tanzania

Power-output potential Gigawatts

174

4,454

Nigeria

Angola

Billion cubic metres/year

Ethiopia

993

Kenya

811

353

Namibia

287

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94%

4G 3G 2G

43%

Equat. Guinea

•

51%

1,051

THE AFRICA REPORT

1,553

(% of connections)

2,230

0% 6%

117

111

3,469

14%

Africa’s mobile phone technology shift to 4G

resource base, including yet to find

Potential annual production

12%

SOURCE: GSMA

proved reserves

Mauritania

BBB BBBBBBBBBBBBBBB+ B+ B+ B+ B+ B+ B B B B B B B B

These Fitch Ratings assess a sovereign’s capacity to honour its existing and future long-term (LT) foreign currency obligations in full and on time. On a sliding scale from AAA to D, countries marked BBBor higher are considered investment grade, BB+ and below speculative. 0%

South Africa

SOURCE: FITCH RATINGS (DATA AS OF 10 NOV 2015)

2015 ONE DATA REPORT

Government spending on agriculture (2011-13 average) Malawi Rep. of Congo Madagascar Burkina Faso Niger Ethiopia Senegal Liberia Zimbabwe Rwanda Guinea Togo Sierra Leone Cameroon Chad Burundi Mali Benin Zambia Gambia Eritrea Tanzania Mauritania Côte d’Ivoire Djibouti Angola São Tomé e Principé Uganda CAR Seychelles DRC Kenya Ghana Sudan Mozambique Botswana Namibia Cabo Verde Mauritius Nigeria Swaziland South Sudan Lesotho South Africa Guinea-Bissau

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

DAY IN THE LIFE EXTRAORDINARY STORIES OF ORDINARY PEOPLE

ROSE SKELTON FOR TAR

194

The voice 38-year-old Ibrahima Soumano follows his ancestral tradition of being a griot. It is as integral to him as being Malian

don’t know when I started to learn to be a griot because I was born one. My father was the head of the organisation of all the griots of Mali, which mediates between ethnic groups, couples, regions, government officials, everything to do with society. From the time we were born, we saw our father take decisions, confront the problems of young people, and we grew up around that. That is transmission. Little by little, that is how we learned. The other name for griot is ‘Djeli’, which means ‘blood’ in Manding. It means that we Djelis run in the body of society, just like blood runs in the biological body. If there is no blood in the body there is no life. If there was no Djeli in society, society would not exist. Sundiata Keita, the founder of the Mali empire, said in 1236: “Griots: be the eyes, the ears, the memory and the mouth of the Mande people, so that the names of important men are not forgotten.” And he said to the Mande people: “Make sure that the griot never cries.” What does that mean? If I am called to assist at a funeral, a baptism or a wedding I don’t get paid a fixed fee. It is all a voluntary service. “The griot must never cry” means “Give something to the griot to eat, drink and be clothed.” People forget everything that the griot does. We bring joy, atmosphere, we intervene at exactly the right moment. He

gives his energy and his time, and he gives it in the service of the people. But, aha! There is a price for that. What I am paid depends on the generosity of the family. I am going to tell you a secret. I once went with a couple to Segou for the marriage of their daughter, and when I got back to Bamako they gave me a car and 3 million CFA francs ($5,200). That was a day when the fishing trip was fruitful! But there are days when I earn nothing. Once I went with a couple to Nara. We had a car accident and I wrote off my car. But I accepted it. This is just to tell you that life is not always rosy. On paper I am polygamous, which is what I signed at the time of marriage. But it is my personal belief that you cannot have two wives at the same time. When you say to a Malian woman that you are going to be monogamous, you will not be at peace. She will get big-headed and she won’t take care of the relationship any more, because there is no more competition. The man regrets having signed this bit of paper. But when you sign polygamous, the woman says: “If I behave well, my husband will stay with me, but if I behave badly, he will go elsewhere.” I am happy when I feel useful to my country. When I negotiate between a couple, or at a wedding, or when I go on the radio to talk about the history of our people, or when people telephone me to ask questions about who we Malians are. I feel useful when I am transmitting my knowledge to the younger generation. Once I was invited to France for a month, but I said, if Malian people need me and I am in France, how can I help them? I would not go to any corner of the earth for a whole month. It is only in Mali where my function as a griot is properly understood. ● Interview by Rose Skelton THE AFRICA REPORT

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